Parliament, Government at Odds over New Tax Code

The Parliament and government are disputing over the deadlines of enforcement of the reduced value added tax (VAT), as well as over the rates of tax on property and motor vehicles. 

The Parliament approved the draft of the new tax code in its first hearing on October 28.  According to the draft, VAT will be reduced by 2%, down to 18%. The draft should go into effect on January 2005, after receiving final approval by the Parliament.

But Finance Minister Zurab Nogaideli now insists on postponing the enforcement of the reduced VAT for six months.

However, an influential group of parliamentarians which includes Chairman of the Parliamentary Committee for Finance and Budgetary Issues MP Roman Gotsiridze, opposes the government?s proposals over the rates of property tax and tax on motor vehicles.

MP Roman Gotsiridze said that the parliamentarians will agree on the postponement of the reduced VAT enforcement if the government compromises over tax on property and tax on motor vehicles.

The Georgian media speculated on December 6 that the dispute between the Parliament and the government might trigger a postponement of enforcement of the entire tax code for two months.