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Finance minister Machavariani speaks at plenary session

By Natalia Kochiashvili
Friday, February 21
The Minister of Finance of Georgia Ivane Machavariani spoke in the parliament in the format of Ministerial Hour yesterday.

The Finance Minister announced that the tax revenue in the second half of 2019 was 550 million GEL- more than previously planned, calling it a ' fiscal overturn.’ Machavariani said that Georgia had never had such an exaggeration, especially given that "it was not the result of conservative planning.”

Minister explained the increase in tax revenues by reversing the situation in 3 directions that were weak holes. Machavariani mentioned tobacco as the first direction, where besides the problem of administration, there was a legislative gap, namely the possibility of non-taxable realization and this was corrected by the changes made last year. According to him, the equalizing excise tax rate significantly improved the administration of the process.

The fuel and other fraudulent schemes were cited as the second hole since the country had essentially revamped its tobacco and fuel sectors.

According to the finance minister, the third, relatively small but significant gap was the TV companies that were demanded to pay taxes:

“Decent payers used to pay 7 million last year. Since October 1st, when we demanded current payments, we suddenly mobilized 5 million from non-payer TVs.”

The minister said that the TV companies have submitted proposals for the tax agreement, according to which they will be able to fully pay their taxes within the next 5 years. Machavariani did not name specific TV companies but said that the schedule would allow them not to stop broadcasting and fully cover their accumulated debt.

Machavariani said that such efforts will generate an additional Gel 22 million in the budget by the end of 2020.

On December 25, 2019, the Ministry of Finance collected the accounts of Kavkasia, TV Pirveli and Rustavi 2. Earlier, on December 23, the ministry said it was once again warning the state-owned debt-strapped TV companies and was giving one day to repay the current debt accumulated from October 1.

Leaders of Pirveli and Kavkasia have associated the Ministry of Finance's 'unfair decision' to their critical editorial policy and asked why a similar measure was not taken against Imedi, which has a multi-million dollar debt. For its part, Imedi said it had no current debt to the budget.

Machavariani noted that the above mentioned 3 holes (fuel, tobacco, and televisions) have been significantly reduced since the second half of 2019.

At yesterday's parliamentary hearing, it was also noted that replacing imported electricity locally 'does not cost anything.' According to Machavariani, the terms and conditions of guaranteed procurement contracts, the volume of which was once restricted with the agreement of the IMF, are likely to be restricted once again and will reach the maximum value of the state-guaranteed tariff contract.

The minister also announced that there’s no more inflation process in December-January. He also recalled that in the second half of last year, the inflation rate exceeded the target level and reached 7% by the end of the year, while the average annual rate was 4.9%.

“If we don’t consider seasonal factors, we can say there is no inflation process in December, and we have no current forecasts, including the International Monetary Fund's latest estimates,” he stated, adding that by the second half of the year it will be reflected in the annual rate inflation and soon go back to target (3%).

It should be reminded that in January 2020, compared to the previous month, the inflation rate in Georgia was 0.7 percent and the annual inflation rate was 6.4 percent.

With the support of the parliament, a list of those with a gambling addiction may be created. This amendment is envisaged by a bill introduced in Parliament in 2017. According to the Finance Ministry's proposal, the registered name will not be let in casinos. Names on the list will be kept for 3 years and registering will be voluntary, as well as possible by a member of the family.

The opposition factions did not attend the Finance Minister's speech in Parliament.