02.Mar .2022 12:00

GDBA Considers Tax Breaks As The Only Way To Curb Inflation

GDBA Considers Tax Breaks As The Only Way To Curb Inflation
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Food product exports from Ukraine to Georgia are suspended, remittances to Russia are hindered, while some suppliers refrain from selling products due to the devaluation of the Russian ruble.

Despite this reality, Georgian distributors say that supply of Georgia with food products does not face a problem and companies are actively working to find other alternative markets, although the fact is that the cost and logistics of products from these markets are much more expensive than in Russia or Ukraine. The head of the Georgian Distributors Business Association (GDBA) suggests that prices for food products will definitely increase.

“Companies do not have a problem in terms of supplies at this stage, although there is a delay in terms of money transfers to Russia. Unfortunately, we depend on both the Russian and Ukrainian markets for such sensitive products as wheat, flour, cereals, oil ... I am not talking about other products; the list is so wide. We work on alternative ways of how to arrange the processes.

Factories in Ukraine will be closed and imports will be stopped. Product imports from Russia will not be stopped if there is no problem with remittances. However, the companies are actively working to switch to alternative markets, which will be followed by a sharp change in prices. Shipping similar product from Europe is 100% more expensive. If the logistics from Ukraine and Russia cost in the range of USD 200-2500, transporting from European countries goes up to USD 5000. In addition, the cost of production in Europe is much higher, which is directly reflected in prices,"- said Iva Chkonia.

In the created reality, the business sees the solution in the change of the tax regime. In order for distributors to respond to the negative impacts of the war, they appeal the government to reduce value-added and income taxes.

“In order not to get inflation twice as high as it is today, tax break is the only solution, so the business can regulate product prices, as well as keep the business and employees stable”, said Iva Chkonia.