Herzog urges VAT cut to help poor

Herzog's proposal showed that a 10 percent increase in food prices was responsible for reducing 3.3% of the available cash among the low-income population.

Social Affairs Minister Isaac Herzog is calling upon the Finance Ministry to cut value-added tax on basic food products in response to the steep rise in food prices particularly affecting low-income earners and the poor. On Wednesday, Herzog presented the proposal at a council meeting of the National Insurance Institute, which showed that a 10 percent increase in food prices has a minor effect on high-income earners, while reducing 3.3% of the available cash among the low-income population. Herzog said that abolishing VAT on basic food products would benefit the poor more than the wealthy, because they spend a substantially greater proportion of their income on food. At the council meeting it was decided to submit a comprehensive draft proposal to the Finance Ministry when the hearings over the 2009 state budget begin in the next Knesset session.