High Court calls on government to match tax on loose tobacco to cigarette tax

Decision a blow to Finance Minister Kahlon, who has resisted calls to hike cost; NGOs fete ruling as a ‘historic achievement’

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

The High Court of Justice on Monday ordered Finance Minister Moshe Kahlon to match the tax rate on loose tobacco to the tax on cigarettes, in what anti-smoking NGOs hailed as a “historic achievement.”

The tax on cigarettes is more than three times higher than the tax on loose tobacco, which means loose tobacco is likely to double in price.

The main purpose of the high tax on cigarettes is to keep people away from smoking. While cigarette smoking has declined over the past few years, the amount of loose tobacco sold has increased dramatically.

The petition against Kahlon and the Health Ministry was filed by the Israel Cancer Association and Smoke Free Israel.

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 aw and seriously consider the negative impacts its policies could have on the public’s health.

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

Responding to the 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.

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

Speaking at the Movement for Quality Government conference in Modiin, Kahlon added: “I don’t agree with the High Court’s decision, but of course I’ll respect it. I will study the decision and will respond to it in the future.”

The decision does not force Kahlon to hike the tax on loose tobacco — he can also opt to lower the tax on cigarettes to make it match the current tax on loose tobacco.

The Israel Cancer Association and Smoke Free Israel 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.”

“This is a pivotal moment in the years-long struggle to reduce the prevalence of smoking in Israel, which stands at more than 20 percent while it is dropping in many Western countries,” the NGOs said in a joint statement, accusing Kahlon of “refusing to understand that Israel must fall in line with the global trend and shutting his eyes despite all the red lights we raised.”

Illustrative. Used cigarettes. (Flickr/włodi/CC BY-SA 2.0)

In June, Likud MK Yehudah Glick went on a hunger strike until the finance minister raised the tobacco tax, listing several Knesset committees that called for the tax on loose tobacco to be raised, but saying Kahlon had systematically rejected their recommendations.,

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

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

Some 26% 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 15.5%.

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

Times of Israel staff and JTA contributed to this report.

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