Treasury: No decision yet on VAT for fresh produce

Litzman opposes initiative, public health experts warn against it.

By
May 22, 2012 04:19
1 minute read.
Fruits at Mahaneh Yehuda

Fruits at Mahaneh Yehuda. (photo credit: Marc Israel Sellem)

The Finance Ministry insisted Monday that “there has been no decision” to levy value-added tax on fresh fruit and vegetables, a move that has already been proposed several times by the Treasury – when Prime Minister Binyamin Netanyahu held his current office and also when he was finance minister.

The Treasury was reacting to a report Sunday in Yediot Aharonot that it is preparing to charge VAT on fresh produce, and also raise VAT from the current 16 percent to 17% to help cover the growing budget deficit.

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VAT on such food would bring in hundreds of millions of shekels but would be very difficult to enforce in outdoor markets.

The Finance Ministry, which commented to The Jerusalem Post on Monday, did not say it was against putting VAT on fresh produce – only that it has not yet done so. The Treasury has decided to raise taxes on tobacco and alcohol, which is beneficial to health, but since fresh vegetables and fruits are already quite expensive and proven to reduce chronic diseases, VAT on them is considered anti-health.

Deputy Health Minister Ya’acov Litzman told the Post that he “opposes the proposal to raise taxes from fresh produce. It would weigh down on the public, so it must prevented.”

He did not mention the health implications of such a decision.

Litzman said he will make his position clear to the prime minister – who also served as health minister – both in writing and orally during the cabinet meeting and in other sessions that deal with the issue.

Ben-Gurion University of the Negev health economist Prof. Gabi Bin Nun, formerly a longtime Health Ministry deputy director-general, said that putting VAT on fresh produce “would raise the price and reduce consumption.”

“This position counters health policies around the world that attempts to encourage proper nutrition and encourages people to eat more fresh fruits and vegetables,” he added.

Such a diet significantly reduces the prevalence of obesity, cancer and heart disease, and according to Bin Nun: “The time has come that taxation be used not only to increase state income but also as a means to promote healthful and proper behavior.”

Nadav Shemer contributed to this report.


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