Georgia’s Ministries of Health, Finance and Agriculture have worked together to reform tobacco tax, and have committed to reaching European Union required levels within ten years.
Excise taxes on tobacco products increased by a significant 0.6 GEL (US $0.22) at the start of 2017, the first practical outworking of Georgia’s new Tobacco Taxation Policy document. It offers four scenarios for increasing tobacco tax to meet EU levels (60 percent of average weighted sales) over timeframes varying between five and ten years.
The document also includes a legal framework, projected health and fiscal impacts and options for sustainable funding models for programmes to prevent non-communicable diseases. It was drawn up by government officials with an expert working group including representatives from customs, the World Bank, non-governmental organisations and independent tax professionals.
‘Increasing tobacco tax is the most powerful policy for reducing tobacco use over the long term. It is high impact and cost-effective. All too often there is a disconnect between Ministries of Health and Finance, but both parties are vital to building an effective tax policy,’ said Dr Ehsan Latif, The Union’s Senior Policy Advisor on Non-Communicable Diseases and technical expert on this project. ‘Georgia’s achievement is significant in that all key stakeholders are working together on this.’
‘We congratulate Georgia on its success building consensus across ministries for increasing tobacco tax to protect health,’ said Dr Gan Quan, Director of The Union’s Department of Tobacco Control. ‘We urge the government of Georgia now to expedite these tax increases, set concrete timelines, and ensure that policies to counter illicit trade are firmly in place.’
Taxation levels are controlled by ministries of finance that often have little background on the population level health and social impacts of tobacco use, or the resulting consequences for the economy. When health and finance ministers collaborate on tobacco tax policy, it can be well-designed to generate predictable revenue and track with inflation and reduce tobacco use. Tobacco taxation reduces consumption because price increases encourage people to quit and prevent non-users from starting to smoke.
A review of the impact of tobacco taxes [WHO 2015] found that a ten percent increase in the real price of cigarettes led to a four to five percent decrease in smoking rates. One half of this drop in consumption was due to smokers quitting, the other half was attributed to smokers cutting down. At present Georgia has some of the highest smoking rates in Europe – almost 58 percent of men and 6 percent of women.
The Union has been working in Georgia since 2009 as part of Bloomberg Initiative to Reduce Tobacco Use Grants Programme.