Resume: In 2017, a research study, entitled Investment Case of Tobacco Control Policy, was carried out in Georgia, spearheaded by the United Nations Development Programme (UNDP). In accordance with the report, a total of 11,400 people die annually in Georgia from tobacco-related diseases. Of these people, each fifth person dies as a result of passive smoking.
The tobacco-associated annual economic burden for the country is GEL 824.9 million. Of this amount, the annual direct cost to the healthcare system (both state and private expenses) is GEL 327.3 million. The indirect cost is GEL 497.6 million which includes economic losses associated with early deaths and smoking in the workplace (missing work due to tobacco-related illnesses, decreased productivity, smoke breaks).
Analysis
Since 1 January 2019, the excise tax rate both for filtered and unfiltered cigarettes has become equal and reached GEL 1.70 per 20 cigarettes. Prior to that, the excise tax rate for unfiltered cigarettes was GEL 0.6. In addition, the ad valorem tax increased on imported filtered cigarettes – companies now have to pay 30% per pack instead of the previous 10%. The Parliament of Georgia adopted the aforementioned changes at the end of the last year through an accelerated consideration procedure.
As clarified by one of the authors of the legislative changes, Akaki Zoidze, the Chair of the Health and Social Affairs Committee of the Parliament of Georgia, the aim of the increased excise tax rate is to reduce tobacco-caused damage. Mr Zoidze stated: “As a result of tobacco consumption, 11,400 people die annually. In this country, 50,000 people on average die every year. Of that amount, each fifth person dies from tobacco-related diseases and this is an early death… As a result of tobacco consumption, this country has GEL 825 million in annual damage from healthcare costs and losses in productivity.”
Tobacco consumption is one of the leading causes of cardiovascular, cancer and respiratory (lungs and airways) diseases. In accordance with the STEPS 2016 research study which focused on the risk factors of non-infectious diseases, almost a third of Georgia’s population consumes tobacco; 57% of men and 7% of women are smokers. However, in accordance with the Cotinine Test[1] results, the real figure of smokers among women is nearly 12.2% and 43% of Georgia’s population is affected by second-hand smoking.
As a part of the FCTC[2] 2030-Georgia project, in coordination with the United Nations Development Programme, World Health Organization and the Ministry of Internally Displaced Persons, Health, Labour and Social Affairs of Georgia, the Investment Case of Tobacco Control Policy was assessed in Georgia. The research study is based on data for 2017. The Investment Case implies collecting data at the country level and determining tobacco’s economic burden. In accordance with the report, 11,400 people die annually in Georgia from tobacco-related diseases. Of this amount, each fifth person dies from passive smoking. The tobacco-associated annual economic burden (both direct and indirect costs) is GEL 824.9 million.
- Annual direct expenses to the healthcare system constitute GEL 327.3 million.
- Indirect expenses – economic losses caused by early deaths and workplace smoking – constitute GEL 497.6 million.
Economic losses from workplace smoking include:missing work from tobacco-related diseases, decreased productivity because of tobacco-related diseases and smoking breaks.
In accordance with the conclusions given in the Investment Case, stricter regulations on tobacco control, which entered into force in 2018, will contribute to a decreased economic loss. The enforcement of four priority components of tobacco control (increased taxes on cigarettes, banning marketing, packing and marking, banning smoking indoors) will enable the country to prevent the deaths of 53,100 Georgian citizens in the next 15 years which will reduce the total economic costs associated with tobacco by GEL 3.6 billion.
Research studies indicate that a high price on cigarettes affects the behaviour of consumers. Equalising the differentiated tax rates on filtered and unfiltered cigarettes is justified, on the one hand, to make sure that expensive cigarettes are not replaced with inexpensive (unfiltered) ones which will not ultimately decrease the number of smokers.
On the other hand, the increased excise tax rate negatively affects the tobacco industry. In addition, a high price on cigarettes will significantly increase people’s expenses. In the case of low-income citizens, this might even have an impoverishment effect. In addition, an increase in excise tax will cause a growth in smuggling.
The amount of smokers cannot be reduced by increased excise tax rate alone. The Government of Georgia has to work harder to promote a healthy lifestyle.
