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On 23 July 2014, the Parliament of Georgia discussed the issue of expressing confidence in the new Cabinet. As a response to the question of Parliamentary Majority MP, Guguli Maghradze, the Minister of Finance of Georgia, Nodar Khaduri, stated:  “We definitely reduced the amount of fines already in December, including the field of revenues.”  He also explained that the mechanisms have changed since the new government assumed office. For example, if previously the entire amount of the fine was debited from the bank account of an individual imposed with a fine, now he/she can keep a balance equal to the minimum amount designated for a one-month subsistence.

FactCheck

took interest in the statement of the Minister of Finance and verified its accuracy.

In order to verify the information about fines, we looked into the amendments to the Revenue Code of Georgia from 2012 (the change of government) to present.  The Code has been amended 20 times since December 2012. The very first of the amendments was in December 2012 as stated by the Minister. The amendment included fines as well. More extensively, the December 2012 amendment to the Revenue Code of Georgia looks like this:

  • Point 4 of Article 272 was amended, changing the amount of the fine from 0.07% to 0.06%;
  • According to the amendment to Point 2 of Article 274, the amount of the fine, as calculated according to Point 1 of the same Article, must not be less than GEL 50 as opposed to GEL 200 in the previous version;
  • Article 276:  a person, not paying the gambling business fee or paying the fee without closing the facility if such is required by the law, will be subject to a fine with the amount equal to 100% of the amount of the fee. The remark “not less than GEL 1,000” has been revoked;
  • The fines determined by Points 1, 3 and 5 of Article 281 have been reduced from GEL 500 to GEL 200;
  • The fine determined by Point 1 of Article 286 has been reduced from GEL 1,000 to GEL 500. Point 3 of this Article, determining a fine of GEL 10,000 in the case of the repetition of the infringement, has been revoked;
  • According to Point 1 of Article 289, a person violating the general date of presenting/generally declaring/declaring the product or transport, will be subject to a fine of GEL 50 for every full or incomplete day but not exceeding GEL 1,000. The previous version determined GEL 100 for each day with the maximum of GEL 1,500;
  • Point 10 of the same Article:  import or export of production, bypassing the customs control of the customs border of Georgia will be fined with the amount equal to 100% of the customs price of the production; will be deprived of transport or will be banned from crossing the customs border of Georgia for one year. The amendment abolished the one year ban;
  • The one year bans have been abolished in Points 11 and 14 of the same Article.
It should also be noted that Point 71

of Article 270 of the Code, reducing the fines for Points 1, 3 and 5 of Article 281 to GEL 200, has also been revoked.

For detailed information about fines FactCheck

addressed the Ministry of Finance of Georgia, requesting the statistics of fines from 2010 to 2014.

According to the response letter, the fines are divided into three categories:

  • Fines and penalties for violating the Revenue Code of Georgia;
  • Fines and penalties for customs law violations;
  • Other fines.

Each category consists of different types of fines. It should also be pointed out that in the response letter the Ministry of Finance explained that the information about the nationwide statistics of the fines and penalties is not in the field of their competence. Thus, they could not provide detailed annual statistics about the topic. We were also unable to get information about the amount of fines according to the types from 2010 to 2014. The letter only provides the sums and the number of transactions for each type of fine. Since there could have been several transactions in the same category, we cannot rely upon these data in our research about the reduction of fines. Hence, we need to use the information about the types of fines in each category and the sums of fines from 2010 to 2014.

The data reflecting the types of fines within each category from 2010 to 2014 look like this:

Fines and Penalties

2010

2011

2012

2013

2014

For Violating the Revenue Code of Georgia

11

11

10

10

10

For Customs Law Violations

15

---

0

0

---

Other Fines

24

25

25

27

26

As the table makes clear, there are no significant changes in the numbers of fines. As for the customs law violations, the information about the types in this category is included only in 2010 data. In all other cases only the gathered amount is indicated.

The statistics of the money gathered by the state in fines from 2010 to 2014 look like this:

Fines and Penalties

2010

2011

2012

2013

2014

For Violating the Revenue Code of Georgia

27,481,914

18,645,609

15,264,544

14,434,003

7,919,497

For Customs Law Violations

9,421,845

5,840,373

3,872,952

6,793,161

3,741,479

Other Fines

149,165,867

163,595,307

176,251,574

173,708,949

80,136,467

As the table shows, the trend of a reduction of the total amount of fines for violating the Revenue Code of Georgia started in 2011 and we have significant reduction at hand for August 2014. There is a reduction in the amount of the fines for customs law violations in 2011 and 2012 and an increase in 2013 whilst in 2014 the amount is almost halved. As for the category of Other Fines, here we also have a reduction in 2013 and 2014.

The total amount of fines from 1 November 2012 to 20 August 2014 is as follows:

Fines and Penalties

01.11.12 – 20.08.14

For Violating the Revenue Code of Georgia

23,363,523,46

For Customs Law Violations

11,418,289,48

Other Fines

318,284,529,59

As for the transactions in the different types of fines, the 2010-2014 statistics are as follows:

2010 2011 2012 2013 2014 01.11.12 – 20.08.14
1,110,134.00 1,428,302.00 1,014,106.00 1,536,063.00 993,516.00 2,538,324.00

The table clearly shows that the number of transactions grew in 2013 whilst it has been reducing in 2014.

Conclusion

The Revenue Code of Georgia was indeed amended and fines were reduced in 2012. The amounts of certain fines have been reduced; however, most of them have not been changed. In addition, there have been no significant changes in the quantitative data in the types of fines.  Furthermore, the document sent to us by the Minister of Finance includes the Revenue Code violation data of only 2010, making it impossible to analyse the information. As for the amounts of fines gathered by the state, there has indeed been a sharp reduction in the Revenue Code violation category in 2013 and 2014 as compared to the previous years. The trend of reduction starts from 2011 and includes other categories as well.

Hence, FactCheck concludes that Nodar Khaduri’s statement:  “We definitely reduced the amount of fines… including the field of revenues,” is MOSTLY TRUE.

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