|Photo by: Ella Yerushalmi|
Microbrewers in high spirits despite tax woes
The business end of beer is not all bubbles and foam, with one word summing up collective displeasure: taxes.
It’s easy to understand why people in the microbrewing business seemed happy at
this year’s Israeli Beer Festival, which took place on Tuesday and Wednesday
this week at Tel Aviv’s Nokia Stadium.
They’ll be the first to tell you
that they love their jobs, they’re passionate about their product, and they are
living their dreams, crafting a niche for Israel in the beer market.
the business end of beer is not all bubbles and foam. Its mere mention proved
quite the buzz-kill for the entrepreneurs peddling their brew at the show, with
one word summing up their collective displeasure: taxes.
Binyamin Netanyahu and Finance Minister Yuval Steinitz’s July decision to up the
sales tax on beer from NIS 2.18 to NIS 4.19 — a small part of a package of
deficit-cutting measures — left small brewski businesses with a
“Everything here is expensive. When they increase the
sales tax by 100 percent overnight, it almost breaks your business,” says Puah
Alon, the marketing manager for Norman Premium, which imports premium beers and
owns the Negev brewery in Kiryat Gat. “Both as importers and producers, this tax
has hit us very hard, and not just us, but the entire
Microbreweries are a small but growing part of the Israeli
beer scene. The vast majority of beer consumed in Israel comes from two
companies: Tempo, which sells Goldstar and Maccabbee, represents 55% of the
market share, and International Beer Breweries, which sells Carlsberg and
Tuborg, represents another 40%.
While microbrews represented only 1% of
the beer market just a few years back, according to Itzik Shapiro, co-founder of
the Shapiro brewery in Beit Shemesh, that number has now jumped to
“Things were actually exploding. Another microbrewery was opening
every month,” says David Cohen, whose Dancing Camels microbrewery in Tel Aviv is
the oldest in the country.
The new tax however, “seems to have ripped the
industry apart. There’s no new openings now and microbreweries are struggling to
Cohen estimates that the taxes he pays in Israel are several
times larger than his fellow brewers in the United States. “If I opened up a
microbrewery in midtown Manhattan and I paid federal excise taxes, New York
state excise taxes and New York City has its own excise tax on alcohol
production, and I took the total of that, it would come to one-eighth the
production taxes here in Israel,” he says.
If the government needs to
raise money, says Cohen, he understands. But the fact that it did not carve out
an exception for small and medium businesses when they upped the beer tax has
put a dent in an a growing industry.
Interior Minister Eli Yishai went so
far as to denounce the tax’s effect on microbreweries, noting that their
contribution to government revenues was a mere NIS 3.5 million.
humble opinion, the State of Israel should be promoting promising ‘blue and
white’ industries,” he said.