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Israeli finance minister reduces tax on beer, liquor

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Philippe Huguen (AFP/File)
Drop in taxes comes after previous doubling of tax, which didn't help reduce consumption

Israel's Finance Minister Moshe Kahlon signed a decree Tuesday that reduced taxes on beer by about 46 percent.

The Finance Ministry said that it decided to reduce the tax after an examination of the results of a previous tax increase on beer showed an rise in prices barely affected beer consumption levels.

In 2012 the tax on beer was doubled to NIS 4.33 per liter of beer with a concentration of over 3.8 percent, however as of Tuesday night, the tax rate for this beer was set at 2.33 shekels per liter.

"We will continue to lower the cost of living in Israel and relieve the consumer wherever possible," Kahlon said Tuesday. "We intend to continue the trend and will not hesitate to correct distortions in the tax system as required and to make it easier for citizens. The move eliminates a tax increase set two years ago, as it became clear that it had not yielded the anticipated results and had even negative consequences, and it was carried out after a thorough examination by the Tax Authority, which supports the move."

As well as in increase in tax on beer, tax on other alcoholic beverages rose by 21 percent as part of the reforms.

Kahlon explained that this decision was returning Israel to the original plan of combating above all the moonshine industry

Due to the intense competition in the hard liquor sector, it is expected that the tax cut will be passed on to the consumers, according to Globes.

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