TAX PROBLEMS OF GEORGIA STATE BUDGET ON THE PRESENT SITUATION

Jemal Kurkhuli, Academic Doctor of Economics Associete Professor

For the purpose of creation of the functional taxation system harmonizing with the capable,optimal world tax policy in condition of world globalization, it is most significant to learn modern structural state of the system.

In 2005-2008 years,in spite of increasing of the budgetary incomes, we consider that the reform of tax administration in Georgia is not finished yet and needs farther improvement. The events made in Taxation system of Georgia should make easier to fulfill its duties by such methods, which would be effective and profitable as for tax payers, for Tax administrations as well.
Tax incomes keep definite place (80-90%) in the state budget structure of Georgia, the volume of which concerning to the whole inner product for 2006 made up 15,5% and for 2007 – 17,1%, and for current year it is planned to increase it on 22-24%. The main source of tax income is made up by indirect taxes (VAT-46% and excise-13%).
The analyze made by us cleared up that during the last years growing the economics of the country with high temps is resulted by simultaneously increasing of the incomes, received from national economics into VAT structures. These incomes will be made mainly at the cost of development of agricultural, industrial, trade and communicational fields of economics. It should be also mentioned that in comparison of Tax Department (35-40%), high incomes (60-65%) received from VAT taxation of import indicate to non-sufficiency of the development level of different branches of economics in Georgia. According to the new Tax Code the lowering of the tax amount of this kind of taxation up to 20%-18% will be considered as progressive steps anyway, though considering the modern economical condition of the country(Ruined regions due to Russian aggression and world economic crisis), it is still very high.
We think that it will be better to differentiate the rate of economics according to the species of production: not less than 5% for the widely used products, and as for the products of luxury and alcohol drinks, cigarettes and all other kinds of products in the range of 12-15%. Differentiated rate of VAT will support to enforce fiscal and stimulating function of the mentioned tax and upon the whole, the investment climate of the country will be improved as a result.
On the basis of modern reality to maximal suppress of the entering of the contraband goods into the country, it is necessary to use economical methods in managing the processes
In practical importer’s mind shouldn’t even appear the idea of importing the goods into the country using so called “Left” ways. We consider one of such event as the fall the VAT taxes up to 15% on the import of oil-product and to decrease fees for excise significantly (on all kinds of oil-products).
Excise has been keeping significant role in Georgian economics during last years, in face of which the budget of our country receives 350-380 million lari every year. Lowering of the excise rate the volume of legalized production will increase, it will keep much more products in the area of taxation and accordingly, the budgetary income mobilized in the face of excise will importantly imcrease. But at the same time the excise staff should be much lower on the products of local production (for instance on tobacco than on imported goods).
After the well-known events of August 2008 when diplomatic and economic relations with Russia were terminated it became actual to make active trading relations with Turkey, Armenia and Azerbaijan, which demand to overview the Customs Tax payments (to encrease them or to move onto zero regime) with above mentioned countries.
Among the proceeding measures we think it is emergency to lower the income taxation up to 15% and to our opinion, considering the existing infation processes (10-11%), it should be ended within three years. To Geogia, as to the country which is the pretender to the membership of the European Community, it is necessary to increase the amount of pencion and salaries in budgetary organizations. Also to increase the growing of salaries step by step, at the same time to widen social programs for students, refugees and indigents. As the final payer for the products (services) is a consumer, which is made of population, we consider that the statements, we offer, will support the lowering the prices in the country, to reduce the inflation processes, to increase the salaries, to minimize the unemployment, and in all to assist the realization the 50 months social program _ “Georgia withoute poverty” offered by the government, in real life.