State for the People, opposition party launched by operatic bass Paata Burchuladze, has pledged to cut personal income tax, to increase minimum monthly age pension by up to 39% and to reform the state-funded healthcare insurance, as well as social benefits system if it wins in the October 8 parliamentary elections.
Presenting its economic and social program under which the party will run its campaign ahead of the elections, the State for the People said on July 8 that it will cut personal income tax from current 20 to 15%.
It said that 15% corporate income tax would apply to only distributed profit – a reform, which has already been endorsed by the sitting Parliament and which will come into effect from 2017.
According to its economic program, a taxpayer will have to register as VAT (value added tax) payer if sales during the previous consecutive 12 months exceed GEL 200,000 instead of current GEL 100,000.
It also pledges to double threshold of annual turnover for businesses to be qualified as “micro business” to become eligible for tax exempts to GEL 60,000.
The State for the People also plans to reduce turnover tax from current 3-5% to 2% for businesses with annual turnover below GEL 100,000, which are classified as “small business”.
The annual property tax rate for an individual on taxable property (excluding agricultural land) varies according to the amount of annual family revenue of the individual.
It also offers to double a threshold of gross annual income to GEL 80,000 that makes a household subject to property tax.
The party also pledges to increase minimum monthly age pension from current GEL 180 to GEL 250, as well as 50% increase of subsistence assistance for socially vulnerable households, which now ranges from GEL 30 to GEL 60 per family member.
Pointing to the pattern of increasing number of beneficiaries of social allowances ahead of elections – the trend which was observed ahead of 2012 and which is also observed in the run up to the upcoming elections, the State for the People claims that governments tend to use this mechanism for electoral purposes, giving social allowances to more people as elections loom. To stop this practice, the party pledges to review households’ eligibility to social allowances only once in four years.
The party also plans to reform existing state-funded “universal healthcare insurance” program to make it “targeted” to those who need it the most. The party says that as a result of personal income tax cut, those who are employed will have more income to be able to pay for private health insurance policy, allowing the government to redirect funds to providing better insurance policies to the socially vulnerable part of the population.
In a short-term period, the party says, tax cuts will result into 1.1 billion decline in tax revenues, but more than half of that can be offset through cutting bureaucratic expenses by GEL 600 million, as well as through government restructuring.
In March poll, commissioned by the International Republican Institute (IRI), Paata Burchuladze’s party was the third not too far behind from the GDDG ruling party and UNM opposition party.