by Andrew Friedman
An imbalance in tax regulations in Israel has led to an explosion of ‘roll-your-own’ cigarettes in recent years, Knesset Member Yehuda Glick (Likud) said Monday. The imbalance has cost Israel at least NIS 1.5 billion in lost taxes in recent years, and has led to a rise in smoking in the country.
In a 23-page study commissioned by Glick, the Knesset Center for Research and Information shows that sales and VAT (value-added tax) add up to approximately 80 percent of the consumer price on packaged cigarettes, but just 42.8 percent of the cost of loose tobacco. As a result, the state treasury took in NIS 6 billion in taxes from packaged cigarettes in 2016, but just NIS 310 million on loose tobacco, during the same period.
As a result, Glick said many young people have stopped buying cigarettes in favor of the roll-your-own packaging that is more cost-effective: Loose tobacco imports have exploded nationally, from about 60 tons in 2012, at a value of about $2.3 million, to about 695 tons last year, for a value of approximately $30.2 million, a rise of 1,236.5 percent.
“The study shows that the State of Israel has lost at least a billion-and-a-half shekels in tax revenue in recent years due to mistaken tax policies regarding tobacco. This situation also struck a serious blow to our ability to use taxation as a tool to reduce smoking and to prevent young people from starting to smoke,” Glick said.
The study was Glick’s latest attack on the tobacco industry in Israel. In June, Glick asked Prime Minister Benjamin Netanyahu to fix the discrepancy in taxation policy vis-à-vis the packaged-vs-loose cigarettes, and also pushed the Health Ministry to tax iQOS, an electronic cigarette produced by tobacco giant Phillip Morris, on par with regular packaged cigarettes.
A spokesman for Glick said the prime minister never responded to that request.
“This report shows clearly: The only way to stop the mass murder of people by tobacco companies is by raising taxes. The dramatic spike in the amount of tobacco sold in Israel is a terrible crime that the State of Israel must deal with before additional people get hurt.
“The State of Israel invests, correctly, tens of millions of shekels a year on security. But we have failed at saving 8,000 people who die annually from smoking-related illnesses,” Glick said.