Finance C'tee challenges government on import tariffs, VAT
Members of Knesset Finance Committee expressed doubt Tuesday that reducing import tariffs on food would reduce costs to consumers.
Members of the Knesset Finance Committee expressed doubt Tuesday that reduction
of import tariffs on food would reduce costs to consumers. They cautioned the
government against changing taxation policy without opening the matter to
The Kedmi Committee presented its recommendations on reducing
duties on food and agricultural products in April, although Finance Minister
Yuval Steinitz is yet to formally approve them.
There have also been
rumors circulating in the media that the government is planning to raise the
value-added tax from 16 percent to 17% in July.
Knesset Finance Committee
chairman Moshe Gafni called Tuesday for Steinitz to bring both matters to his
team, although he acknowledged that Treasury officials had informed him that
there were no plans to raise VAT.
Defending his decision to convene a
discussion on the matter anyway, Gafni said: “We would not want to wake up one
morning to find that the [finance] minister has signed new tax
MK Shai Hermesh (Kadima) called the removal of duties a
“mirage,” saying it would benefit importers and large retailers rather than
consumers and would harm local workers.
“Pri Galil pays $1,000 per month
to Israeli factory workers, instead of paying $1 per day to Thai workers, and
the end result is that the consumer pays an extra 30 agorot per can,” he said.
“The price of a can of tuna will drop from NIS 5 to NIS 4.7 if duties are
removed. I have no doubt that consumers are ready to pay an extra 30 agorot to
ensure the continuation of local industry.”
MK Avishay Braverman (Labor)
slammed the “simplistic method” of comparing local prices to foreign prices,
saying that tariffs should only be removed once the finance minister has
presented the full picture and the matter has been thoroughly
“Over-concentration is the real problem in the Israeli
economy,” he said.
“The last thing I would be doing during a time of
global crisis is lowering tariffs, which in any case will not lower costs to
MKs Ruhama Avraham-Balila (Kadima), Faina Kirschenbaum
(Yisrael Beytenu), Ghaleb Majadle (Labor) and Amir Peretz (Labor) also expressed
concern about the Treasury’s plans.
Treasury Budget Department
representative Moshe Oren acknowledged that there was “no certainty that
lowering duties will translate to reduced prices” without also introducing
Israel Tax Authority representative Shirly Avivi
attempted to assuage the MKs’ fears, telling them the Kedmi Committee took into
consideration possible damage to local industry when conducting its work and
that it was scheduled to present further recommendations on the matter of
The Tax Authority supports removing tariffs on raw
materials, but not at the expense of local manufacturers, she
Manufacturers Association of Israel director-general Amir Hayek
explained his organization’s opposition to removing tariffs, accusing the
government of “conduction experiments with human beings.”
Tax Authority and Industry, Trade and Labor Ministry forecasts that there would
be only a minimal effect on prices, he said: “This measure will endanger tens of
thousands of workers without taking into consideration how much it will impact