Beginning Monday, prices on some currently low-cost alcoholic beverages in Israel will shoot up – while the cost of others will come down considerably. The changes will come about as part of a taxation reform to set Israel's duty on alcohol more in line with other OECD countries.
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 – will triple in price, with vodka that had previously cost some NIS 40 ($12) per bottle rising to NIS 130 ($36.11). Meanwhile, currently expensive drinks like blended scotch, liqueurs, and other lower-alcohol beverages will become much cheaper.
The reform had been set to go into effect next January, but Finance Minister Yair Lapid recently signed an order setting the changes to go into effect on July 1. The government decided in principle to change the tax system on liquor in 2010.
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.