Traders strike against tax code amendments

The markets were locked at Station Square on February 1 as traders in the vicinity and the local supermarkets went on strike to express their discontent at the changes in the tax system coming into force that day. The traders said they had only been informed about the changes a couple of days before by the Department of Revenue.

The new code obliges taxpayers to keep copies of their status as tax payers to avoid a fine of GEL 100 and take responsibility for providing clients with an invoice for each product. The organisers of the strike refused to serve clients or sell products. They absolutely oppose issuing an invoice for each sale, as the fine for a first violation of this rule is GEL 5,000, and future ones carry fines of GEL 10,000. The protestors said they are unable to either issue an invoice for each product or to pay the fine, meaning they will have to cease operating and remain without a minimum income.

“If a client comes to buy something that costs GEL 2 I should give him an invoice, but how can I get so many invoices? It is absolutely impossible for me to follow the rules so I am just asking the Government to implement the fixed payment system so that we can avoid any complications and live in peace,” one of the traders stated, adding that customs duties have also been raised. The protestors have threatened to continue their strike in front of Parliament.

Koba Davitashvili, the leader of the People’s Party, joined the protestors and said that the people have been forced to go on strike by the Government’s unwise decision. “Most of the market has gone on strike, and this will become a mass strike in the next few days. This decision wasn’t made by them but forced on them by the Government of Georgia introducing the new tax code which threatens sellers with a variety of fines and even imprisonment,” Davitashvili told the media.

Meanwhile the Ministry of Finance accused Davitashvili of misleading the protestors. Irakli Siradze, Deputy Chairman of the Ministry, said that the change concerning issuing invoices does not apply to the retail market. “The change in the tax code applies to large businesses and obliges the selling side in a deal to issue an invoice. No changes have been made in respect of private sales,” explained the Deputy Chairman.

There has also been a rise in the cost of products over the last few days in the markets. Further rises are expected this year, economic analyst Demur Giorkhelidze told the media, while stressing that this process will be gradual. He pointed out that inflation is not a new issue in Georgia but emphasised that this round of increases has been prompted mainly by international trends and the devaluation of the lari against the dollar. “Georgia is an import dependent country. The income of its citizens is low, which decreases demand on different products. This usually produces price increases on imported goods," Giorkhelidze said.

Giorkhelidze further explained the status of the Georgian economy, which he said is prone to monopolisation and lacks competition. “The devaluation of the lari, the difficult social-political situation and international conditions will all influence prices. It is difficult to forecast the duration of this trend because importers compensate for decreased demand for particular goods with price increases,” he concluded. The National Bank of Georgia however denies this. “The small changes of the balance between the currencies can’t be connected with the price increases on goods imported from EU countries. The lari has become particularly stable against the USD lately which can only decrease prices on the local market,” Giorgi Kadagidze, the President of the National Bank, explained.