Simhon calls for halving VAT on foods, medicine, daycare

Lowering the VAT on these items from 16% would increase the spending power of the middle class, he said in an interview with Israel Radio.

August 3, 2011 03:57
2 minute read.
Agriculture minister Shalom Simhon

Shalom Simhon 311. (photo credit: Ariel Jerozolimski/The Jerusalem Post))


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Industry, Trade and Labor Minister Shalom Simhon called Tuesday for the Value Added Tax on basic foods, medicine for the elderly, and toddler daycare centers to be reduced to eight percent.

Lowering the VAT on these items from 16% would increase the spending power of the middle class, he said in an interview with Israel Radio. “Until now the middle class has carried a load greater than its proportion to the population, and the balance has to change,” he said.

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Simhon also confirmed that he and Finance Minister Yuval Steinitz will on Sunday announce their proposal of new rules and regulations for the dairy industry, in light of the Kedmi Committee’s recommendation that the government supervise the quarterly profits of manufacturers and supermarket chains instead of controlling shelf prices.

“We have tried hard to operate with sensitivity,” Simhon said. “The dairy farmers will benefit. The committee recommended that the government allow them to grow and to manufacture more in the coming years, so that their revenues will increase. In addition, the government will provide subsidies over a period to ensure that dairy farming becomes more economical and profitable. The smaller dairy farms won’t be affected. Naturally, the larger dairy farms will pay more.”

The Kedmi Committee’s recommendations have not pleased everybody, with Agriculture Minister Orit Noked slamming it over what she called “a lack of professionalism.”

“The Kedmi Committee has not cooperated with Agriculture Ministry professionals, and its conclusions will destroy the dairy industry,” Noked said during a tour of dairy farms in Kfar Vitkin, a moshav just north of Netanya.

She added that at next Sunday’s cabinet meeting, she will submit an alternative proposal for the dairy industry that she said would reduce retail prices while protecting farmers.

Meanwhile, Tnuva chairwoman Zehavit Cohen met in her office Tuesday with Itzik Elrov and Beny Groberman, organizers of the mass consumer boycott of dairy products in June that prompted the government’s investigation into the industry.

In the meeting, which lasted two hours, both sides agreed they should keep discussions open, and Elrov and Groberman proposed the establishment of a roundtable in which all the links in the chain – dairy farmers, manufacturers, supermarkets and the government – would participate.

Cohen said Tnuva would participate in the initiative and that whenever a proposed solution holds every link in the chain responsible, Tnuva would do its part.

On Wednesday, dairy farmers say they will hold back the supply of milk to manufacturers as part of a day-long protest over the government’s decision to lower the amount they get for a liter of milk by 6 agorot.

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