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Lapid Raises Cigarette Prices

Hours after introducing budget cuts and tax increases, Finance Minister Yair Lapid signs an order calling to raise the prices of cigarettes.
By Elad Benari
First Publish: 5/8/2013, 3:43 AM

Finance Minister Yair Lapid
Finance Minister Yair Lapid
Assaf Shilo

Hours after he introduced a plan which includes budget cuts and tax increases, Finance Minister Yair Lapid signed an order calling to raise the prices of cigarettes, tobacco for cigarettes and cigars.

The order, which went into effect at midnight, sees the prices of cigarettes rising by 2.5 to 3 shekels per pack. Tax authorities indicated that the State is expected to see an income of about 800 million shekels per year as a result of the increase.

Such increases in prices can be decided upon by the Finance Minister without the need to introduce new legislation, and are usually announced without prior warning in order to prevent merchants and customers from stocking up on supplies before the price increase.

Other measures in the plan introduced on Tuesday include a 1.5% increase in income tax, which is expected to bring in more than 4 billion shekels, a 1% increase in the VAT, to 18%, and a reduction of child payments to 140 shekels per child per month.

The government will also end its subsidies for afternoon care for children aged 9, and will reduce its subsidy for dental care for children. Housewives will be required to pay health tax and national insurance institute (Bituach Leumi) payments.

Each government ministry will be required to cut their staff by 1%, and there will be no new hires until 2015. The Foreign Ministry will cut five foreign offices.

Lapid spoke about the planned budget cuts, saying, “Yes. It’s hard. We knew it would be hard, but it’s different when it actually happens.”

“It’s hard, people are angry. But this is exactly what it means to take responsibility: to do what is hard, knowing that people will be angry at you,” he continued.

Taxes are now hitting new sectors as well, Lapid said. “For the first time in years the Israeli middle class isn’t the only one paying the price. This time we went where nobody had dared to go before: tax on corporations, on luxury goods…”