Page 28 - GEORptAug19

corporate tax collections as a result of a tax reform passed in 2017 that lowers corporate tax in order to boost private investment.
Three ministries will account for more than half the spending: healthcare (GEL3.5bn), infrastructure (GEL1.85bn) and education (GEL1.18bn). Universal healthcare coverage has been one of the main electoral promises with which the ruling Georgian Dream party has based its campaigns since 2012.
Meanwhile, infrastructure development is the strategy that the government has chosen to spur economic activity, particularly in the logistics and tourism sectors, and particularly with a focus on rural development.
Georgia Central Government Budget
(GEL mn)
2016 Actual
2017 Actual
2018*
Revenues
8,580.0
9,750.4
10,595.6
Tax revenues
7,986.8
8,991.3
9,695.9
Grants
Expenditures
296.8
289.9
339.4
Other revenues
296.4
469.2
560.3
8,741.8
9,372.1
9,543.7
Compensation for employees
1,452.3
1,385.4
1,407.6
Use of goods and services
1,117.8
1,248.5
1,288.3
Interest Expense
397.7
476.6
513.1
Subsidies
359.3
541.4
444.7
Grants
935.1
968.6
1,282.7
Social benefits
Other expense
3,150.1
3,324.3
3,501.3
1,329.5
1,427.3
1,106.0
Net operating balance
-161.8
378.3
1,051.9
Change in nonfinancial assets
416.1
874.2
1,811.2
Total balance
-577.9
-495.9
-759.3
Source: Finance Ministry
6.1.1 Budget dynamics - tax issues, privatisation plans
BAT director responds to sales effects of tax hikes and smuggling in Georgia
Tobacco producers sales in Georgia dropped by almost 30% during a single month after tax hikes, British American Tobacco (BAT) corporate business director Zviad Skhvitaridze has said.
The country hiked the value-added tax (VAT) and excise taxes for cigarettes and tobacco, which resulted in end-user prices rising by one US dollar per 20-cigarettes compared to prices found in neighbouring countries. The cost of a pack of Winston cigarettes moved up from Georgian lari (GEL) 4.30 ($1.61/€1.41) to GEL4.80 ($1.80/€1.57), while the price of a packet of Camel cigarettes increased from GEL 4.00 ($1.50/€1.31) to GEL 4.50 ($1.68/€1.47).
Skhvitaridze said that the sales decline was prompted by rising black market sales but he said that he expected the situation to improve during the year as smuggling was tackled.
28 GEORGIA Country Report August 2019 www.intellinews.com