(photo credit: Thinkstock/Imagebank)
Finance Minister Yuval Steinitz signed an order Wednesday evening increasing
taxes on cigars, cigarettes and beer.
The order, which went into effect
at midnight, lobbed a 10 percent tax on existing retail inventories of tobacco
products and increased the sales tax on future purchases from 260.6% to 278.6%,
adding an estimated NIS 2-3 to the price of each pack of cigarettes.
price of beer also went up as the tax rose from NIS 2.18 to NIS 4.19 per
The Finance Ministry estimates the new levies will net the state
some NIS 1 billion.
So-called “sin taxes” are popular policy tools as they both
increase government revenues and deter “bad” behaviors, such as drinking and
Steinitz also agreed with Prime Minister Binyamin Netanyahu that
the cabinet will vote on Monday regarding tax changes for Israel’s largest
companies, including both increases and breaks. Companies that amass profits
instead of paying out dividends, which are taxed, will now be able to pay a
reduced tax as an incentive to pay these dividends.
The state expects to
net some NIS 100 billion from the deal.
Earlier Wednesday, before
Steinitz signed the order, heads of the Israel Cancer Association voiced their
support for the plan to raise taxes on tobacco and alcohol.
letters to Steinitz and Netanyahu, who formally serves as health minister, ICA
president Prof. Eliezer Robinson and director-general Miri Ziv said the
organization had long supported such tax hikes because significantly reducing
consumption saves lives. More than 10,000 people a year in Israel die from the
effects of smoking or secondhand smoke, they said, and others are debilitated
from serious diseases including heart attack, cancer and respiratory
“There is no safe level of tobacco use,” they asserted, “and it