CUSTOMS HAS ITS OWNER

SOPHICO SICHINAVA

Implementation of budget plan remains to be a chronic problem notwithstanding the permanent change in customs leadership. Any street passer-by can freely speak about smuggling.

Yet, no one has any recipe of “suppressing the dragon of contraband”, controlling import and directing revenues to budget in a country that bulges at the seams. Therefore, the new owner of the customs will not have any such recipe, either. The country faces two acute problems – elimination of chronic deficit of the income budget and protection of legal business. We think that the latter is more important for the country. A priori we would like to say that according to the May, June and July indices of customs system, plan of budget contributions ranging from 40-41 million per month is an insurmountable Rubicon. We have to put up with the idea that the customs plan will not be fulfilled in the nearest three months. The reason of it is not only incompetent administration, but also ineffective struggle against smuggling, incorrect budget planning and mechanisms of import regulation. We will focus on the last one.
The fact is that income plan of national budget with regards to customs system consists of ten principal trade groups. What are these groups?
Petrol;
Diesel;
Flour;
Sugar;
Gas;
Adipose and vegetable oil;
Cigarettes;
Chicken gammons;
Wheat.
It is high time to take special rules for import and realisation as well as quotation rules of the import of these goods and preliminary sale of quota. For example, market demand for petrol is minimum 50 thousand tons per month in Georgia while the number of registered cars is 400 thousand. Petrol should be put up for an auction with 5-6 thousand plumb initially. Flour, sugar and other products should be distributed in the same way. The auction should be held once in a quarter and bids should be cashed in the beginning of each month five days prior to the auction. In this case, each month the budget will receive 15 000 000 GEL from petrol realisation, 5 millions from flour, 2 millions from oil, 2-3 millions from gas, 2 millions from wheat. Thus, the whole customs plan makes it possible to implement ten kinds of goods, not to mention the other hundred. According to this scheme, large importers together with the incompetent and corrupted legion will join the struggle against the smuggling. At the same time, amendments should be made to the Administrative and Criminal Code of Georgia. The amendments should include strict punishment for goods without quotas, such as 10 years’ imprisonment and forfeit of vehicle and goods. We should also note that this form was accepted for strategic goods in many countries. For instance, there are quotas on fuel in Israel and England. There will be quotas on chicken gammons in Russia since 29 April in accordance with the decision of the government. These quotas do not only concern importing countries, but also exporting ones. For instance, this year import of 744 thousand tons of chicken gammons to Russia is permitted, of which 553,5 thousand tons are from America, 140 thousand tons are from Europe and 33 thousand tons from Brazil. If we take into consideration the fact that each of the above-mentioned producing country has its own distributor, then it turns out that these countries are also quoted. Thus, Russia tries to protect local production of meat and regulate market. This quota, certainly, concerns cigarettes, too. Firm Philip Morris, the world leader in the production of cigarettes, intends to increase production of LM, Marlboro and other cigarette brands in Russia from 73 billions to 103 billions. According to the experts’ calculations, even 100 billion cigarettes are an excessive production for Russia. Therefore, Philip Morris intends to reduce realisation price of goods and pursue aggressive business policy in Russia. A significant part of this stream is likely to move to Georgia leading to the increase of contraband cigarettes in our market. Therefore, it is necessary to introduce quotation for the protection of local cigarette brands. Local producers will then buy quotas and thus, import will be limited. At the same time, administration in realisation sphere should become more severe in the home market. It is also necessary to abolish the so-called monitoring service and legion while responsibilities and rights should return to customs and tax service. It is also necessary to license realisation of this production in the home market and to prohibit realisation of the above-mentioned production in places of non-organised trade. This is the only way out for increasing budget revenues and protecting legal business. At the same time, there is no need in revising tax rates, as they do not contradict any of the international liabilities undertaken by Georgia.
Yet, let us go back to Georgia. The above-described approach and project has, certainly, existed earlier, too, but lobbyists of contraband have always blocked them, thus bringing great damage to the country. If the above-mentioned is taken into consideration, the present owner of customs will not stay longer than his predecessors. Thus, he will not fall victim of non-realised customs plan.