The recent hike in purchase tax on cigarettes in Eretz Yisroel has caused a 10% fall in the number of cigarettes sold according to data obtained by Globes.
This is the sharpest fall in sales of cigarettes seen in recent years. On May 9 purchase tax on cigarettes, cigars and tobacco was raised adding NIS 2.5-3 to a pack of cigarettes. In the following four weeks sales of cigarettes fell 10%.
One market source said, “I believe sales will rise but won’t return to the levels before the tax hike.”
In 2012, the cigarette market was worth NIS 7.1 billion (in prices to the consumer). The latest tax hike is the third such rise in less than 18 months. Tax on cigarettes was raised in January 2012 and again in July 2012, adding NIS 3 to a pack of cigarettes. The latest tax hike means that the price of a pack of cigarettes has risen NIS 5.5-6 in the past 18 months. Tax represents 85% of the price of a pack of cigarettes. Tax hikes saw cigarette sales fall 2.7% in 2012 in terms of quantity.