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Will the Higher Excise Tax on Cigarettes Lead to an Increase in Contraband?

Published: July 31, 2013 | 12:30 pm
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The legislative changes relating to an increase in excise tax on tobacco products have been discussed at the second parliamentary hearing. The changes will lead to an increase in excise tax from 60 Tetri to 75 Tetri on filtered cigarettes, and from 15 Tetri to 20 Tetri on the unfiltered ones. The initiative has had a negative response from tobacco manufacturers, who state that the tax increase could lead to closures of small businesses, as well as a price increase on cigarettes of between 20% and 30%. They also do not rule out an increase in contraband.
In contrast, the member of the parliamentary majority Nodar Ebanoidze states that the increase in the excise tax is meagre for both the filtered and the unfiltered products, and will not lead to an increase in contraband. He adds that high excise taxes are already in place in the neighbouring countries, and there will be no interest in smuggling tobacco into Georgia. According to Mr. Ebanoidze, the legislation is designed to reduce the number of smokers in the country, and will bring an additional 26 million GEL into the State Budget.

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