Cabinet approves reduction in water tariffs

If bill passes Knesset approval, Israeli households will see a drop in water prices caused by VAT reductions.

January 24, 2016 20:26
2 minute read.
water facet

Water dripping from a tap. (photo credit: ING IMAGE/ASAP)

Israelis’ water costs are expected to decline significantly after the government on Sunday passed a bill that would lower water tariffs by amounts equivalent to the value-added tax rates charged on consumers’ bills.

Assuming that the legislation, proposed jointly by Finance Minister Moshe Kahlon and Interior Minister Arye Deri, goes on to receive Knesset approval, Israeli households will see a drop in water prices caused by VAT reductions.

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To make up for the associated losses, the legislation requires that the government transfer about NIS 250 million to the country’s water sector, according to the Finance Ministry.

“This is another step in our battle against the cost of living and reducing social gaps in Israel,” Kahlon said Saturday night, ahead of the cabinet vote.

Alongside recent measures to reduce public transportation fares, mandatory insurance requirements and pension-management fees, a decrease in water tariffs “predominantly benefits the middle class and weaker sectors and will help stimulate economic growth,” Kahlon explained.

Deri, meanwhile, stressed that the decision will save families thousands of shekels each year and Prime Minister Benjamin Netanyahu, at the cabinet meeting, credited Deri for leading the move.

“We are working to reduce the cost of living,” Netanyahu said, prior to the vote. “It expresses our sincere desire to make things easier for citizens and to simultaneously ensure the continued growth of the economy – we are doing both.”

Last week, the Knesset approved similar legislation submitted by Kahlon and Deri in the transportation sector, leading to a 14.5 percent reduction in ticket prices for travelers, equivalent to the VAT charged on bus and train fares.

In this case, as well, the government assumed responsibility for subsidizing losses, to public transportation operators with whom ticket-pricing agreements had already existed.

The cabinet on Sunday also approved legislation initiated by Agriculture Minister Uri Ariel seeking to decrease tariffs for water used in agriculture.

Ariel’s proposal is expected to lead to a reduction of about 20 agorot per cubic meter in water prices for farmers, according to a statement from the minister’s office.

“After everyone understood that the water prices are not reasonable for the agricultural sector, I’m pleased that we reached agreements with the government to reduce the price of water,” Ariel said, stressing the social and economic practicality of the decrease. “The only way to lower the cost of food is to advance Israeli agriculture.”

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