New tax reform to cut alcohol prices - except for whiskey

By STEPHANIE RUBENSTEIN, GREER FAY CASHMAN
Although Israel's exorbitant taxation on whiskey has upset even British Ambassador Tom Phillips, taxes on other alcoholic beverages are expected to be reduced soon, The Jerusalem Post has learned. In a new reform due to be adopted in a few months, all brands of alcohol will have the same tax per liter, instead of higher taxes only for luxury brands, according to Dan Leeor, managing director of the Scottish Trading Company, which imports wine and spirits. The tax reform will take place over the course of three years, and prices will be reduced each year. After three years, the tax on alcoholic beverages will be NIS 37 per one liter of pure alcohol, according to Leeor. For example, an 80-proof bottle of vodka (which means it is 40 percent alcohol) would be taxed 40% of the NIS 37. This will be a positive change for all luxury alcohol brands, except for whiskey, which will still face a tax double the normal price, Leeor said. All luxury alcoholic brands currently face a tax of about two-thirds their normal price, he said. "It's a mistake to say that taxes are currently only an issue for Scottish whiskey," he told the Post. "The whole whiskey market has the same problem, whether it is produced in Scotland, Ireland, Canada or the United States. [They are all] suffering from a higher tax formula." The Finance Ministry confirmed that it had received a letter of protest over whiskey prices from Phillips two weeks ago. It is still in the process of evaluating the situation, according to ministry representative Li Gat. In his letter to Finance Minister Ronnie Bar-On, Phillips said taxes on Scotch whiskey should be lowered, due to its soaring prices throughout Israel compared to similar blends from other countries. Phillips wrote the letter after becoming aware of the new proposals concerning customs and duties, which would affect Scottish whiskey. Concerns were also expressed by the Scotch Whiskey Association, British Embassy spokeswoman Karen Kaufman told the Post. Ilan Azitsur, manager of the alcohol department for Hacarem Spirits, confirmed the new tax-reform proposal, but the Finance Ministry declined comment. Bowmore Scotch can be purchased in the domestic market for about NIS 500, while in duty-free stores, the same bottle can cost less than NIS 180. The Finance Ministry is currently debating whether whiskey should be treated as the other alcoholic beverages in the new tax reform, rather than keeping its tax at twice the price, according to Leeor. Should the tax reform include whiskey, in three years, after the tax reform has taken full hold, Bowmore is expected to cost about NIS 150. In 2007, 1,000,500 bottles of whiskey were imported into Israel, 70% of which were from Scotland, according to Leeor. The alcoholic brew of whiskey originated in Scotland, and it became popularly referred to as Scotch. There are now five major whiskey-producing countries in the world: Scotland, Ireland, America, Canada and Japan.