TBILISI, DEC. 16 2016 (The Conway Bulletin) — Georgia’s Parliament has passed a bill that will increase tax on tobacco, imported cars and oil products, media reported, price rises that have irritated people already coping with a drop in economic conditions.
MPs endorsed the long-trailed tax rises when the Georgian Dream coalition government presented its 2017 budget. The extra revenue raised will help fill a gap in the government’s budget created by reforms to corporate income tax which the government approved in May. From Jan. 1 2017, tax on undistributed profits, both reinvested or retained, will be abolished, creating a 500m Lari ($178m) gap in the state budget.
The government hopes that the reduced corporation tax burden will boost foreign direct investment, an important part of the economy. The opposition, though, said the tax rises would add extra burden on families.
Zurab Chiaberashvili, a senior MP in the United National Movement said: “We have offered the government an alternative plan that would cut costs. We are trying to persuade them that their plan would impoverish hundreds of thousands of people.”
Different criteria will determine the tax increase rate for each category. The type of oil product, the age of the vehicle and type of cigarettes, filtered or unfiltered, will be the main determiners.
An extra tax for car owners, whose family’s combined income exceeds 40,000 Lari ($14,600), will be introduced.
Taxes on gambling, both real and online, will be increased too.
Zurab, a 32-year-old Tbilisi resident who owns a wine shop said the tax rises would be a problem. “The rise in the price of oil products will lead to higher prices in all sectors and people pay the consequences,” she said.
“However, our country is full of polluting and inefficient old cars. Maybe the move will push people to buy new cars in order to pay less taxes.”
ENDS
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(News report from Issue No. 310, published on Dec. 23 2016)