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Price increases on tobacco products

By Tatia Megeneishvili
Monday, September 2
Starting September 1, the tobacco excise tax will increase. On filter cigarette (domestic and imported), the excise tax rate increases from 0.60 up to 0.75 Gel, while for non-filter cigarettes - from 0.15 up to 0.20 Gel. Therefore, according to The Ministry of Finance of Georgia (MOF), these regulations are not designed to receive a fiscal effect. As for a possible increase in the price of cigarettes, the tobacco excise rate increase does not cause defaults to rise in retail sales price and the amount depends on the market situation.

Director of Issues and corporate communications of JTI Caucasus (Japan Tobacco International), Nikoloz Mchedlishvili said that they knew that the excise tax was going up. "We had a meeting with the Minister, Nodar Khaduri and he informed the whole industry about the changes. How much the price of cigarettes will increase is hard to say, because the importers have to count new prices. There are many types of cigarettes, accordingly various calculations must be done, but the fact that cigarette prices will rise is obvious," stated Mchedlishvili.

According to Mchedlishvili, the government must take into account the prices in the region. He said prices should not be higher than they are in Armenia. "This will mean that the Armenian cigarette can come in and wipe our market. In 2004, the excise tax was increase from 40 up to 90 tetri. Afterwards, 75-80% of cigarettes on the market were illegal. That means that the budget has lost money, that's why the government should consider this hazard," said Mchedlishvili, adding that according to their estimates, 500-600 million Gel goes into the budget from the tobacco excise tax.

The Public Health Institute's director and health expert, Kakha Ghvinianidze, believes that the price increase of the tobacco excise tax on tobacco products availability is the first financial, fiscal and economical step. "This is the correct and necessary decision; this is the minimal event in our tobacco-fighting strategy that aims to see a real reduction of smoking, so in the future smokers will have more motivation to quit smoking," stressed Ghvinianidze.