Brewers hit by massive tax hike
Higher taxes on beer and tobacco are supposed to pay for several economic reforms, including free schooling from the age of three, Israeli news services say. Israel’s recently craft beer renaissance might start to whither due to a significant rise in excise and purchase taxes that the Israeli Finance Minister Yuval Steinitz ordered at the end of July 2012.
With immediate effect, the tax load on beer almost doubled from NIS 2.18 (USD 0.56) to NIS 4.19 (USD 1.07) per litre.
At the Dancing Camel Brewery in Tel Aviv, the first microbrewery to open in Israel and regarded as the premier boutique brewery in the industry, founder David Cohen fears that the new tax will hit craft brewers hard. He has launched an online campaign to get the attention of the government, illustrating the toll this tax will have on local businesses and the developing beer culture in Israel.
“Overnight,” Mr Cohen told the Times of Israel, “the price of a keg went from 300 to 340 shekels.” For various reasons, Cohen explained, the amount consumers pay for a beer is already 300 percent of production costs and he has found that there is little room to bump the price. The price of a half-litre of draught beer went from 28 shekels to 32 shekels (USD 8.17), he said. Taxes went up from 44 percent to 61 percent for production costs, which gives the government two-thirds of the profits, Mr Cohen concluded.
Mr Cohen is not the only victim. The tax will threaten the entire microbrewing industry and the more than 25 licensed breweries that have only recently opened.
Despite his bleak message to everybody who cares to listen, Mr Cohen said the Dancing Camel Brewery won’t be closing its doors anytime soon. But business just got a whole lot tougher.
