Simulation-based policy analysis for Georgia using the TETSiM model

This report assesses the fiscal and public health implications of alternative tobacco excise tax policies in Georgia using the Tobacco Excise Tax Simulation Model (TETSiM). Taking 2024 as the baseline and projecting outcomes through 2028, the analysis evaluates the current tax structure and four reform scenarios. Despite a decline in smoking over the past decade, prevalence in Georgia remains high, while excise rates and prices have eroded due to inflation and rising incomes. The results show that a gradual 20% annual increase in specific excise taxes (in the 2026-2028 period) delivers the strongest and most sustainable outcomes. Compared with the status quo, this scenario increases real prices by 33% and annual government revenues by 20% while reducing consumption and smoking prevalence and preventing nearly 17,000 premature deaths. The findings indicate that regular, sizeable, and comprehensive excise increases across all tobacco and nicotine products are essential to achieve durable fiscal and health gains.

Keywords: Excise, Taxation, Tobacco, Smoking

JEL classification: H24, I18

Countries covered: Georgia