Alcohol taxes rise, gasoline prices fall

A new tax regime for hard liquor may double the prices of some alcohol; gasoline goes down slightly.

June 30, 2013 22:32
2 minute read.
Beer mugs

Beer mugs 370. (photo credit: Reuters)

As of Sunday night at midnight, a new tax regime for hard liquor that may double the prices of some alcohol went into effect, while the price of gasoline fell .09 NIS per liter.

The new alcohol tax regime, intended to both make the substance less affordable for minors and increase state revenues, was first approved in 2010 and meant to go into effect in 2014. Finance Minister Yair Lapid moved that up to pull in extra cash to battle the budget deficit.

Until now, spirits have been taxed at 75 percent of their value plus NIS 21.28 per liter of alcohol content (in other words, the stronger the spirit, the higher the tax). The new system will charge a consistent NIS 105 per liter of alcohol. As a result, prices on cheaper alcohol are expected to rise, while the cost of more-expensive liquors will drop.

Under the old system, depending on the price of the product, 750 ml. of 80-proof vodka would incur taxes of NIS 15 to NIS 24, while whiskey taxes would be NIS 15 to NIS 74. Under the new system, both will be taxed NIS 32.

Critics say the tax is regressive, reducing the tax burden on luxury products the wealthy may buy, while making products that middle- and lowerclass people tend to buy more expensive.

But the Israel Tax Authority counters that the reform helps eliminate “negative externalities” by making a potentially harmful substance less readily available.

Regarding gasoline, the price of self-service 95-octane fell NIS 0.09 per liter from NIS 7.52 per liter to NIS 7.43 per liter, including VAT, a reduction of 1.2%, Sunday night at midnight.

The full-service charge remained unchanged at NIS 0.18 per liter.

The price of self-service 95- octane gasoline in Eilat (which is VAT free) fell 1.1% from NIS 6.37 per liter to NIS 6.30 per liter, while the full-service charge remained unchanged at NIS 0.15 per liter.

The price of gasoline is based on the average quotes of CIF La Vera trade prices for fuels in the Mediterranean basin, which are then converted from dollars into shekels. The price drop for gasoline in Israel is due to the 1.6% drop in the La Vera trade price in June and the shekel’s 1.2% appreciation against the dollar during the month.

Globes contributed to this report.

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