Global Journal of Economic and Finance Research

Tobacco use is not only a public health issue, but also a significant economic issue. The number of tobacco users, excise taxes, and regulations directly impact the state budget, tax revenues, the labor market, and economic growth. Despite its high prevalence, regulating the tobacco sector is challenging, as it relies on market resistance, smuggling, consumer behavioral responses, and the differing economic capabilities of social groups.

In Georgia, as in many countries, the state budget receives significant revenues from tobacco excise taxes, which makes it possible to finance healthcare, education, and infrastructure programs. However, high excise taxes and other regulations, such as smoke-free zones and advertising bans, affect tobacco sales and market structure, partly contributing to smuggling and the growth of the black market, which leads to a decrease in state revenues.

Economic analyses show that reducing tobacco consumption through pricing policies (excise taxes, price increases) and regulations (marketing restrictions, smoke-free zones) may have negative budgetary impacts in the short term, but in the medium and long term, taking into account health, work capacity and labor market effects, it creates the potential for successful economic benefits.

Short-term losses include a partial reduction in revenues, an increase in smuggling, and in the long term - more effective monitoring of production and the impact of reduced consumption on market stability. In the future, the country's policymakers can use an integrated economic approach to control the consequences of tobacco use, increase tax revenues, reduce black market risks, and provide sustainable, long-term economic benefits to the state and society.

Excise duty, Budget revenues, Georgia, Tax reforms, Tobacco.

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