Social Justice protest 311.
(photo credit: Israel Police)
Barring a major security flare-up – or an air strike on Iran – that will eclipse
all other concerns, economic issues are shaping up to be a major focus of
citizens’ concerns ahead of next year’s elections.
Just days after
trouncing MK Tzipi Livni in the Kadima primary race, MK Shaul Mofaz began making
his influence and socioeconomic priorities heard, calling on Kadima MKs to take
part in Saturday night’s small Tel Aviv march against the rising cost of
Seen as a precursor to massive grassroots protests this coming
summer that will attempt to recreate the energy and critical mass of last
summer’s demonstrations, Saturday night’s march coincided with yet another hike
in gas prices.
Prime Minister Binyamin Netanyahu, acutely aware of the
potential for a populist backlash resulting from such a move – which would
immediately translate into higher prices for consumers as both electricity and
transportation costs skyrocketed together with gas prices – intervened at the
last minute to limit the size of the price hike to just 5 agorot per liter
instead of the planned 20 agorot per liter. The haste with which he intervened
gave the distinct impression that Netanyahu was nervously caving in to popular
pressure, instead of being governed by rational
Undoubtedly, gas prices are high in Israel. Since January
2009, the price of 95-octane gas climbed from NIS 4.75 per liter to NIS 7.79 per
liter. The doubling of crude oil prices accounts for most of the rise. But this
still does not explain why a gallon of gas costs $8.16 here and about half that
price in the US.
Israelis, like Europeans, pay a high excise tax. In
Israel it is NIS 2.96 per liter, 19.1 percent more than three years ago. And we
also pay a 16% value-added-tax not just on the gas we buy but also on the excise
The rationale behind the tax is to discourage people from using
their cars, thus reducing pollution and the accompanying societal costs caused
by pollution. When we drive our cars we cause indirect damage to others in the
form of lung cancer, vascular infections and in general a higher propensity for
sickness. The state has to step in to provide citizens with compensation in the
form of higher health care expenditures. And when sick people miss work,
productivity is also negatively affected.
Therefore, policy makers in
Europe and in Israel reason, the state has the right to raise fuel taxes to
either pay for these added costs or to dissuade drivers from causing them in the
However, unlike countries like Italy, Germany and Norway, in
Israel we are also forced to pay an exorbitantly high purchase tax on new cars.
According to the Jerusalem Institute of Market Studies, various taxes that we
pay when we buy a new car amount to between 113% and 128%, five times higher
than most European countries. The high purchase tax on cars actually has a
negative effect on pollution since it tends to discourage people from buying
new, more fuel efficient and greener cars.
Also, the high purchase tax
has created a situation in which Israelis have relatively fewer cars than
Europeans – not to mention Americans. If in the US there were 808 cars per 1,000
people in 2009, according to World Bank figures, and in most western European
countries there were more than 500, in Israel there were just over 300, about
the same as Hungary and Argentina.
But unlike many European countries,
Israel has yet to develop an efficient public transportation system, though
significant steps in the right direction have been made.
are beginning to understand that socioeconomic issues – the price of gas, the
price of a new car and efficient public transportation – can decide the next
elections. The Iranian nuclear threat and the security challenges of combating
Iran’s proxies on our borders – Hezbollah in the North and Hamas in the South –
are not going away.
But when single mothers work 12 hour days and still
can’t feed their families, when the so-called “middle-class” struggles to
maintain a subsistence-level existence, even the potential existential threats
presented by Palestinian terrorists, by Kassam and Grad rockets, or by an
Islamic Republic with nuclear capability can pale in comparison to the immediate
existential threat of failing to make ends meet.