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“We have raised prices for a number of brands in our portfolio for commercial reasons,” announced Big Tobacco company Philip Morris (PMI) last week. The cost of a packet of cigarettes will be raised by NIS 1 (US30 cents) while a packet of loose tobacco by NIS 2.

It is estimated that PMI owns approximately 58% of the tobacco market share in Israel, followed by Globrands with a 31.5% share and Dubek with 10.4%. And a rise in PMI’s tobacco prices is believed to lead to price hikes in these other brands.

Israel’s tobacco tax

The Health Ministry had pointed out that iQOS would not be subject to any tax or restrictions until the US FDA decides on how to regulate the product.
The state of Israel collects NIS 6 billion annually in excise tax on cigarettes. This tax accounts for over 80% of the price of cigarettes, split in 65.5% excise tax and 17% VAT. This time last year, Israel’s Health Ministry had also released a statement pertaining to the possibility of taxing PMI’s Heat not Burn device, iQOS.

The Health Ministry had pointed out that iQOS would not be subject to any tax or restrictions until the US FDA decides on how to regulate the product. Therefore, once the FDA takes a decision, Israel’s Health Ministry will decide accordingly.

The jury is still out on iQOS

In the meantime, last month a panel from the US FDA, reviewed the Modified Risk Tobacco Product (MRTP) application for iQOS. They voted to reject over a million pages of evidence, dismissing Philip Morris International’s claim that their iQOS heated tobacco product is a safer alternative to tobacco.

This vote is not the final act in determining the fate of the iQOS MRTP application, and the FDA isn’t obliged to follow the panel’s recommendations. The agency can be expected to take a formal and final decision in the coming months.

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