Opposition skewers PM for belated ‘discovery’ of food VAT exemption

Netanyahu proposes 0 VAT for food staples, despite rejecting the policy in the past.

By
December 8, 2014 20:38
2 minute read.
Netanyahu Livni and Lapid

Netanyahu Livni and Lapid. (photo credit: REUTERS,MARC ISRAEL SELLEM/THE JERUSALEM POST)

 
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Opposition politicians pilloried Prime Minister Benjamin Netanyahu on Monday for his election-time adoption of a plan to lower food prices he had rejected in the past.

Speaking at the Globes Business Conference, Netanyahu said he would move to eliminate the 18 percent value-added tax on basic foods under price supervision, such as bread, milk and eggs.

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“This plan will let us save hundreds of thousands of shekels a year. It means an immediate 15% reduction in the price of supervised foods, and all this reduction will reach consumers; and the more disadvantaged a family is, then the more significant is the saving. That’s social justice,” the prime minister said.

He contrasted the policy to former finance minister Yair Lapid’s zero-VAT plan, which would have eliminated the tax on some young couples buying new homes. That plan, which was heavily criticized by economists, would have served only people who could afford large down payments, and cost the government billions in the process, Netanyahu said.

Economists argued that the plan would raise prices because the high cost of housing is the result of a supply shortage of apartments. Many basic products in the food market are already under price control, but the government still charges full value-added tax on top of that. Many European countries, on the other hand, give reductions or exemptions for the tax on certain food items.

Lapid, who is chairman of the Yesh Atid party, accused Netanyahu of reversing course on the zero-VAT housing plan and not reading the details, all of which he voted for in the cabinet.

“Only a month ago he told the government that he opposes putting food under any price supervision. What happened since then? Elections were called,” Lapid said.



Lapid was not the only one to notice Netanyahu’s apparent about-face.

“Really, Bibi, what a brilliant idea,” former justice minister Tzipi Livni, who is chairwoman of the Hatnua party, wrote on her Facebook page. “It’s just a shame you didn’t mention that this suggestion is not new and also not yours: [Former Hatnua minister] Amir Peretz, in the government discussions on the budget on October 8, exactly a month ago, presented the government with this exact plan: 0 VAT on basic products.” Netanyahu rejected it then and took credit today, she said.

Labor MK Shelly Yacimovich wondered in her own Facebook post how Netanyahu, after three terms as prime minister and one as finance minister, suddenly happened upon the plan.

“For one confusing moment, it seems as though a young, socialist political flower awoke this morning with a glimmering idea in his brain,” she wrote. “Is there no limit to the cynicism? There is not.”

Meretz MK Ilan Gilon said the proposal went even further back; Netanyahu felled a Meretz-backed version of the bill in May 2013, as a response to the VAT increase from 17% to 18%.

Hadash MK Dov Henin said he hoped people were not fooled by Netanyahu’s “spin.”

“This is an antisocial government and election slogans will not change that,” he said.

Meanwhile, Bank of Israel Gov. Karnit Flug noted at the same conference that since 2003, food prices increased 39% while housing costs rose 40%.

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