Israel Declares War on Duty-Free Cigarettes in Landmark Move to Slash Smoking Rates and Fill State Coffers.

In a seismic shift for travelers and the duty-free industry, the Israeli Knesset Finance Committee voted yesterday (June 30) to completely abolish the decades-old tax exemption on imported cigarettes by June 2028, closing a loophole that has long allowed travelers to bypass Israel’s high tobacco taxes by bringing in duty-free cartons.

The Phased Death of Duty-Free Cigarettes

Under the newly approved phased plan:

• January 2027: Half of the tax exemption will be eliminated.

• June 2028: The exemption will be fully cancelled.

Billions in New Revenues

The Israel Tax Authority estimates the move will:

• Generate NIS 50 million (US$14.85 million) in 2027,

• NIS 70 million (US$20.78 million) in 2028, and

• Stabilize at NIS 100 million (US$29.69 million) annually thereafter.

For a state still managing wartime expenditures and a ballooning healthcare burden, this represents billions in new long-term revenues over the coming decade, much of which will be directed to anti-smoking education, cessation campaigns, and health system strengthening.

Why Now? Israel’s Smoking Crisis

This move comes against the backdrop of an alarming Ministry of Health report published this month, revealing that 20.5% of Israeli adults still smoke—a rate over 30% higher than the global average. Even more concerning:

• Israel’s smoking cessation rates are 50% lower than the OECD average.

• Israel has one of the highest tobacco consumption rates in the developed world, despite repeated government efforts.

Simply put: Israel’s travelers have been gaming the system, buying cartons in duty-free shops and feeding a smoking culture that refuses to die.

The End of the Cheap Carton

Currently, travelers entering Israel can legally bring:

• Up to one carton of cigarettes (200 cigarettes),

• Or 250 grams (8.8 ounces) of loose tobacco, duty-free.

From June 2028, every cigarette and gram of tobacco brought into Israel will face full taxation, effectively ending the era of duty-free cigarettes for personal use.

A Blow to the Duty-Free Industry

Duty-free operators, who rely on tobacco sales as a cornerstone of their revenue, are bracing for a dramatic downturn in cigarette sales in Ben Gurion and Ramon airports. Analysts predict a double-digit revenue hit for duty-free shops as travelers are forced to weigh the benefits of cheap cigarettes against the looming tax hammer.

The Bigger Picture

This is not just a tax story; it is a public health revolution in the making:

• Israel’s move positions it among a small group of nations willing to take on the tobacco industry’s last sanctuaries: duty-free zones.

• It aims to reduce smoking rates, particularly among youth and low-income populations who rely on cheaper, duty-free cigarettes.

• It signals that Israel is prepared to use fiscal policy to advance public health, even at the expense of entrenched commercial interests.

Bottom Line

Duty-free cigarettes in Israel are on death row.
June 2028 will mark the execution date.

For smokers who have relied on the cheap loophole, the countdown has begun, and the message is clear:

Smoke all you want, but you will pay the price.