# Tobacco control policies

<mark>Georgia is a party to the WHO’s Framework Convention on Tobacco Control (FCTC) since 2006. The State Tobacco Control Committee was created in 2013, chaired by the Prime Minister. And the Tobacco Control National Strategy of the Government of Georgia—through the Decree No196, published in July 2013—set the goal of reducing smoking prevalence among the adult population by 2 percent annually.</mark> A major legislative reform on tobacco control was adopted by the Georgian Parliament in May 2017, after unsuccessful attempts in previous years. The main components of the law are summarized on <u>Table 2, and</u> a more detailed description is included in <u>Annex 1. Georgia’s tobacco-control efforts have received</u> international recognition. The new legislation has been called “one of the strongest single comprehensive tobacco control laws in the world” (The Tobacco Atlas 2018). The policy changes have enjoyed popular support among Georgians.<sup>5</sup> However, the implementation of some provisions has been postponed until the end of 2022.

In 2017, Georgia was selected as partner to the FCTC’s 2030 project (the only country from the Europe and Central Asia region). This initiative seeks to provide special assistance to fifteen partner countries to foster the implementation of the Convention (WHO 2017). Additionally, tobacco control has important implications for Georgia’s process towards integration to the European Union (EU). Within the 2014 Association Agreement signed with the EU, Georgia is required to implement the provisions of the tobacco product and tax directives. The EU Directive 2011/64/EU on the structure and rates of excise duty on manufactured tobacco requires Georgia to meet counter-illicit trade and tobacco tax rates obligations— based on the FCTC’s targets—by 2021.

# Tobacco taxation policy

<mark>Taxes on tobacco products in Georgia were introduced in 1997. However, locally manufactured cigarettes enjoyed substantially lower tax rates, while the fixed specific excise rates allowed the real value of taxes to erode until 2004 (Little et al. 2019).</mark> Despite substantial efforts for tobacco-control, taxes on tobacco in Georgia remain lower than international best practices. Tobacco products are taxed with a value-added tax (VAT), as well as _ad valorem_ and specific excise duties. Between 2005 and 2014, the total share of excise duties averaged 35 percent of the price of a pack of cigarettes (NCDCPH 2016). The most recent amendment to the Tax Code on tobacco taxation, increased the _ad valorem_ excise tax from 10 percent to 30 percent, and equalized taxes for filtered and unfiltered cigarettes starting in January 2019 (Agenda.ge 2018). More recently, in November 2019, new fiscal policies were introduced to increase the tax burden on rolled tobacco.

Under the Association Agreement and the EU Directive 2011/64/EU, Georgia has committed to implementing—by 2021—excise duties on cigarettes of:

- (a) 60 percent of the average weighted retail price, and

- (b) Not less than 90 euros per 1,000 cigarettes.<sup>6</sup>

> 5 According to the UNDP, 80 percent of Georgians support smoke-free regulations, and 90 percent support the ban on advertising (UNDP et al. 201X).

> 6 Under an original plan to meet the EU requirements by 2020, the total excise tax would have had to increase by 70 tetri annually, starting in 2016. Assuming complete pass-through of taxes to consumer price, the average sales price of a pack of filtered cigarettes would have to be 7.22 GEL by 2020 (UNDP et al. 2016). As of January 2019, the <mark>cost of a pack of Winston, Camels and Magna cigarettes were reported at GEL 4.80, GEL 4.50 GEL and to GEL 4.20, respectively, after the recent increase in</mark> _<mark>ad v</mark> alorem_ tax <mark>(Agenda.ge 2019).</mark>

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