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Daily Israel Report

Liquor Tax? I Didn't Do It, Says Finance Minister(s)

Don't blame him for the increase in taxes on cheap liquor, Finance Minister Yair Lapid said Monday
By David Lev
First Publish: 7/1/2013, 10:29 PM

Alcohol
Alcohol
Flash90

Don't blame him for the increase in taxes on cheap liquor, Finance Minister Yair Lapid said Monday. Speaking at a meeting of Yesh Atid MKs, Lapid said that the changes were the doing of former Finance Minister Yuval Steinitz, and that he had nothing to do with it.

The new state budget proposed by Lapid has proved unpopular with many Israelis for many reasons – but the most unpopular edict, it appears, is the one that went into effect midnight Monday, termed a “reform” in liquor prices.

According to the new rules, duties and taxes will be levied based on the amount of alcohol in a bottle. As a result of the reform, high-alcohol content beverages that were, until the reform was announced, reasonably priced – like vodka and arak, the anise-flavored Middle Eastern whiskey – tripled in price, with vodka that had previously cost some NIS 40 ($12) per bottle rising to NIS 130 ($36.11). Meanwhile, expensive drinks like blended scotch, liqueurs, and other lower-alcohol beverages have become much cheaper. The reform had been set to go into effect next January, but Lapid recently signed an order setting the changes to go into effect on July 1.

Lapid has been getting a great deal of flack for the move, considering that vodka and arak are generally purchased by working class Israelis in supermarkets – while the more expensive liquors and liqueurs are usually purchased by middle and upper income Israelis in specialty stores. One radio commentator said that it was typical Lapid, “to help out his cigar-smoking buddies who need a drink to relax with, while once again sticking it to the poor.”

According to Finance Ministry figures, the Treasury stands to make NIS 200 million from the changes.

But Lapid said that if it had been up to him, he would never have made the changes. “There are a lot of people who don't like this tax, and I am one of them. We examined the possibility of canceling it, but this was a decision made by the previous finance minister, as part of his arrangement for Israeli membership in the OECD. We must keep this decision, even if we are sickened by it,” Lapid said.

Responding to the “charges,” Steinitz said that he wasn't to blame. “I never decided to raise the taxes. I left the decision to the next finance minister,” who turned out to be Lapid – and who himself decided on the tax increase, Steinitz said.