ISRAEL. The Israeli Ministry of Finance has proposed halving the duty free tobacco allowance from two cartons of cigarettes per person to one – a move that the industry in the country is fighting.
The Treasury (Finance Ministry) estimated that the move would bring in an additional ILS300 million (US$80 million) per year, a figure that the trade, and in particular Tel Aviv Ben Gurion Airport duty free concessionaire James Richardson, disputes.
The move concerns inbound allowances and it could have a particular impact on the retailer’s “˜collect on return’ business, where passengers purchase before they leave the country and pick up when they come home.
The proposal is currently before the Knesset (Parliament) Finance Committee. In potentially encouraging news for the duty free business, Committee Chairman MK Moshe Gafni has told the Treasury he understands that it will consult with the Ministry of Transport and the Israel Airports Authority (IAA) and report back on the implications of any lost revenues. The IAA is among the state bodies opposed to a cut in the allowance.
James Richardson Israel CEO Avi Ben-Hur made a submission to the Committee, reported by online business media Globes. Ben Hur said: “In the best case, government revenues will increase by ILS70 million (US$19 million), and the net value of the measure won’t exceed ILS30 million (US$8 million). You do not institute a reform for this, which will slash the profits of a company that operates on the basis of a concession through 2014. This is a change in the rules of the game in the middle of it.”
James Richardson Duty Free Chairman Garry Stock told The Moodie Report that he hoped “common sense would prevail” and that the move would not go through.
The proposal to slash duty free tobacco allowances mirrors attempts at a similar move in 2008, which did not become law.
 |
How online business media Globes covered the story this week |
