While beer has been brewing in Israel since the time of King David, Israel’s recently revived beer culture and industry might start to dry up due to a significant beer tax that was passed late last month.
Finance Minister Yuval Steinitz signed an order, effective immediately, to raise the tax on cigarettes and beer. The purchase tax on beer was raised from NIS 2.18 to NIS 4.19 per liter. The tax spikes were part of a package of measures officials say are needed to pay for several economic reforms, including free schooling from age three.
At the Dancing Camel Brewery, the first microbrewery to open in Israel and regarded as the premier boutique brewery in the industry, they fear that the new tax will hit hard. So owner David Cohen has launched an online campaign to get the attention of the government, illustrating the toll this tax will have on local businesses and the developing beer culture in Israel.
‘We have brought tourism, employment and national pride to a global industry that traces its very roots to this region. I ask you Mr. Prime Minister – are these the type of people you want to drive into bankruptcy?’
Cohen’s plea began as a single, private message sent to the prime minister’s Facebook page. But after receiving no acknowledgement, Cohen decided to post his letter on Netanyahu’s public “wall” on July 29. This stirred a bubbling wave of support from the public and fellow boutique beer lovers everywhere.
Nine years ago, Cohen left his career as a CPA, spent a year training at a microbrewery in New Jersey, and moved to Israel to open his own brewery. He invested his life savings and, with the help of foreign investors, opened the Dancing Camel Brewery Company in 2006. The aim to re-establish a lost beer culture with Jewish roots which he said can be traced back thousands of years.
Cohen said it was an incredibly difficult process to create a brand new market in Israel and he was forced to make a great number of personal and financial sacrifices along the way. Now the tax increase has added a whole new hurdle, he said.
Addressing the prime minister, he wrote, “Your finance-minister’s office levied a tax on beer production that will quite frankly, shut my business. I cannot absorb a tax increase that literally doubled overnight since my business is struggling as it is. I will be forced to pass this tax on and as a result, sales will fall. I will be forced to fire our workers and shut our doors. I will be left with nothing after nine years of Aliya, other then the staggering debts which I have personally accumulated.”
Cohen has done the math. “Overnight,” he told the Times of Israel, “the price of a keg went from 300 to 340 shekels.” For various reasons, Cohen explained, the amount consumers pay for a beer is already 300% of production costs and he has found that there is little room to bump the price. The price of a half-liter beer on tap went from 28 shekels to 32 shekels, he said. Taxes went up from 44% to 61% for production costs, which gives the government two-thirds of the profits, Cohen concluded.
“For a bar owner,” he said, “this is outrageous. It’s not a sin for a guy to buy a beer and, no doubt, we’re going to sell less of the product; the price of beer has been pushed into a range that is not affordable for the average consumer.”
Cohen is not the only victim. He joined fellow small business owner, Tali Oz Albo, who published her own public letter to the prime minister on his Facebook page last week. Cohen is also collaborating with other local brewery owners. A group of them came together last Tuesday evening to formulate a plan which Cohen said will include lobbying and an ongoing social media campaign
The tax will threaten the entire boutique beer industry and the more than 25 licensed breweries that have only recently opened, Cohen said.
‘In Israel, there is a very colorful palette of flavors at our disposal to integrate into our signature brews,’ Cohen said. He incorporates seasonal and local Israeli ingredients like pomegranate, date honey, etrog and Israeli chili pepper into his concoctions.
Speaking on behalf of the industry he wrote, “We have brought tourism, employment and national pride to a global industry that traces its very roots to this region. These breweries have been started, largely by individuals with similar stories to mine. People with a dream, a passion and the drive to build something from their own sweat and money, where nothing previously existed. I ask you Mr. Prime Minister – are these the type of people you want to drive into bankruptcy?”
Cohen said the tax hike won’t only batter the tiny Israeli beer market, but is also a huge disservice to the local beer culture has finally begun to brew again. “There’s Belgian beer, German beer, why not Israeli beer?” Cohen asked.
“In Israel, there is a very colorful palette of flavors at our disposal to integrate into our signature brews,” Cohen said. He incorporates seasonal and local ingredients like pomegranate, date honey, etrog (citron) and Israeli chili pepper into his concoctions.
Boutique beer connoisseur and Tel Aviv local Ran Locar said the price increase will not affect his beer drinking habits but will impact the variety of beers one can buy in Israel.
“The ‘mainstream’ beers, the Heinekens, Tuborgs and Carlsbergs, will always be there. But there’s nothing special about them. Nothing ‘Israeli’ about their label, their bottle, or the content of that bottle,” he said. “Tempo doesn’t make or import any beer with ‘a light scent of coriander seeds’ or ‘a hint of citrus’, and that’s what I like about boutique beers. Each one of them is a story of a guy, with an idea and a passion for beer.”
Medical student and homemade beer brewer Levi Fried, who moved to Israel three years ago, has been an active online voice on behalf of the Dancing Camel. “Beer,” he said, “is an art form.” He believes that the beer tax could be amended to bypass local breweries and instead, only target the mass labels and imports. “If you’re going to tax,” he said, “don’t tax beer made in Israel. Go after the cheap, ‘beginner’ drinks instead.”
Despite his bleak message to Netanyahu, Cohen said the Dancing Camel Brewery won’t be closing its doors anytime soon. But his local beer battle just got a whole lot tougher.