Finance Minister Yair Lapid raised taxes – again – on cigarettes and alcohol in July, and there already is a change in consumption habits of Israelis, according to a marketing report cited by Globes.
The survey showed that 44 percent of those drink alcohol have reduced their intake, while 60 percent of smokers puff less. The C.A. Marketing Information Institute said that its survey covered a month before the tax hikes took effect and a month afterwards.
The liquor tax hike upped the price of Arak by more than 20 percent, with the tax increases focusing on drinks like Arak, which have a high level of alcohol.
The cigarette tax rose by 18 percent.
The bill for alcohol dropped by more than 20 percent, to an average of less than $40 per person. More significantly, the number of drinkers who said they kicked the habit rose from 17 percent before the reform to 29 percent afterwards.
Five percent of the Israelis Jews told the market survey that they stopped smoking after the tax hike, and one-third said they smoked fewer cigarettes.
The big drawback for Lapid is that he may have killed the goose that has laid the golden egg of reliable tax revenues, but it is worth cost by improving Israel’s health and longevity. Two long-term benefits might be less expenditures on health care and higher productivity at work, as well as a better family life.