Finance minister signs order to drastically raise tax on loose tobacco

Kahlon reluctantly approves hike from Thursday morning, after High Court rules that rolling tobacco and cigarettes should be taxed equally

Illustrative. A woman holding tobacco, January 25, 2017. (Flash90)
Illustrative. A woman holding tobacco, January 25, 2017. (Flash90)

Finance Minister Moshe Kahlon on Wednesday signed an order to impose higher taxation on loose tobacco that will dramatically raise its price. The rise will come into effect on Thursday morning.

Loose tobacco has been much cheaper than cigarettes, with the tax on cigarettes more than three times higher than that on rolling tobacco, but with the increased taxation, it is expected to double in price.

Kahlon was reluctant to sign the order, but was forced to do so by order of the High Court of Justice, which earlier this month ruled that the tax rate on loose tobacco must match that of cigarettes. Anti-smoking groups hailed the decision as a “historic achievement.”

In the ruling, Justice Daphne Barak-Erez said that, while the government had the authority to decide on taxation policy, it had to abide by the principle of equality under the law and seriously consider the negative impacts its policies could have on the public’s health.

Finance Minister Moshe Kahlon speaks during an event of the Movement for the Quality of Government in Modiin, February 4, 2019. (Hadas Parush/Flash90)

She ruled that there was no relevant difference between cigarettes and loose tobacco that justified the gap in tax rates.

Responding at the time to the court decision, Kahlon said: “My economic worldview is to lower taxes, not raise them, so I oppose any tax hike. The citizens of Israel work hard and pay enough taxes, and it is our duty to lower taxes as much as possible.

The petition against Kahlon and the Health Ministry was filed by the Israel Cancer Association and Smoke Free Israel who both praised the High Court decision as a “historic achievement in the battle against smoking, for the public’s health and for reigning in the tobacco companies in Israel.”

Last June, Likud MK Yehudah Glick went on a hunger strike to try to force Kahlon to raise tax on loose tobacco. He listed several Knesset committees that had called for it to be raised, but said Kahlon had systematically rejected the recommendations.

Israelis smoking and drinking. (Miriam Alster/ Flash90)

Glick, who has long advocated against smoking, called off his hunger strike after 25 days.

Earlier last year, the Knesset announced a major crackdown on smoking, banning the practice from many public spaces including hospitals, courts, concerts and parking lots, including within 10 meters from the entrance to any such place.

Some 26 percent of Israeli men smoke cigarettes, according to a 2015 study by the Health Ministry, slightly above the European Union average of 24.2%. Among women, just 13.6% of adults smoke cigarettes, a bit below the EU’s average of 15.5%.

A 2017 report found that nearly 40% of Israelis are smokers by the time they finish their compulsory army service. That is twice as high as the overall national rate and dramatically higher than among US soldiers, according to a study in the journal Nicotine and Tobacco Research. The study found no significant change over the years in how many soldiers were smokers when recruited or discharged.

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