Increase of tax revenues and inflation

In the first four months of 2011 the budgetary revenues came to GEL 2.144 bln. Out of this amount GEL 1.933 bln was yielded from tax revenues. This figure is GEL 481 mln higher than the figures for the same period of last year. The economic analysts think that a major reason for such a radical increase is the level of inflation in the country. However there is a certain element of economic growth as well.

Opposition economic analyst David Onoprishvili thinks that because the country depends heavily on imported products, VAT is accumulated accordingly from the trade sector and the increase of the price of imported goods will of course increase tax revenues. The increase of tax revenues, according to Onoprishvili, does not necessarily mean that there is serious economic progress in the country.

Other economic analysts however challenge this position and suggest that current developments in the country including construction of buildings and roads as well as tourism infrastructure creates jobs and taxes are paid from the salaries of those employed.