Smokers choose to butt out rather than pay higher cigarette tax

Since a tobacco price hike, the third in 18 months, went into effect in May, sales have dropped by 10%

By Asher Zeiger 17 June 2013, 5:51 pm

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Illustrative photo of a woman smoking a cigarette outside an Israeli cafe. (Nati Shohat/Flash90)

A tax hike on cigarettes that went into effect last month has many choosing to stub out their smokes rather than punish their wallets.

Since the increase went into effect on May 9, cigarette sales in Israel have dropped 10 percent, the financial newspaper Globes reported Monday.

Finance Minister Yair Lapid passed the surprise measure adding NIS 2.50-3 ($0.68-0.82) to the price of a pack of cigarettes as part of his sweeping financial reforms to balance the national budget; the move was expected to increase tax revenues by NIS 800 million ($220 million) annually.

The news of the decline may augur well for teetotalers hoping to see a drop-off in alcohol consumption when a similar sin tax on wine, beer and spirits goes into effect at the beginning of July.

Cigarette consumption and sales have both dropped in Israel in recent years, although it is difficult to determine how much can be attributed to higher taxes, how much to bans and fines for smoking in public places, and how much to an increased awareness of health ramifications.

In May 2012, the Health Ministry said the number of smokers in Israel over the age of 21 dropped 2.7% from the previous year, although overall cigarette consumption rose by 0.1% in that same period.

Last month’s cigarette tax was the third such increase in the last 18 months. In that period, the price of a pack of cigarettes has risen between NIS 5.50-6.00 ($1.50-1.64). In addition to the ever-increasing cost of tobacco products, last July, strict anti-smoking legislation went into effect that made it illegal to light up on or near public transportation, at swimming pools, theaters, shows, and at outdoor event venues, as well as restaurants, cafes, cafeterias, clubs, synagogues, and places of worship.

Those caught smoking in the prohibited locations face a fine of NIS 1,000 ($275), while the owner of the premises can be fined NIS 5,000 ($1,370).

According to Globes, in 2012, cigarette sales reached approximately NIS 7.1 billion ($1.95 billion), 85% of which was sales tax.

Hillary Zaken and Stuart Winer contributed to this report.