Page 25 - GEORptMar19

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.
The 2018 budget law envisions an economic growth level of 4.5% in 2018.
Georgia State Budget Figures
(GEL mn)
2016 Actual
2017 Plan
2017 Actual
2018 Q1
2018 Q2
Revenues
8,580.0
9,489.5
9,750.4
2,635.1
2,384.7
Tax revenues
7,986.8
8,820.0
8,991.3
2,380.0
2,136.8
Grants
296.8
284.46
289.9
173.3
49.1
Other revenues
296.4
385.0
469.2
81.8
198.8
Expenditures
8,741.8
9,121.22
9,372.1
2,093.8
2,309.6
Compensation for employees
1,452.3
1,393.51
1,385.4
322.4
339.5
Use of goods and services
1,117.8
1,144.27
1,248.5
257.6
304.8
Interest Expense
397.7
503.04
476.6
128.4
123.5
Subsidies
359.3
419.97
541.4
95.5
114.6
Grants
935.1
1,020.28
968.6
229.2
206.4
Social benefits
3,150.1
3,313.18
3,324.3
832.2
846.5
Other expense
1,329.5
1,326.98
1,427.3
228.5
374.3
Net operating balance
-161.8
368.23
378.3
541.3
75.1
Change in nonfinancial assets
416.1
909.04
874.2
277.4
245.6
Total balance
-577.9
-540.81
-495.9
263.9
-170.5
Source: Finance Ministry
6.1.1 Budget dynamics - tax issues
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.
Akaki Zoidze, head of the parliament’s health committee and a lawmaker of the ruling Georgian Dream party, played down the impact of the smuggling, saying that the illegal market covered less than 1% of total sales.
"In the regional context we see that the excise taxes in Armenia, Russia and Azerbaijan are radically low. The difference is more than one dollar [per package]. This fact is quite a great temptation for people engaged in illegal
25 GEORGIA Country Report March 2019 www.intellinews.com