Prices go up following VAT hike

Bread, salt, fuel prices increase; new water tax to be imposed retroactively pending Knesset approval.

Bread 224.88 (photo credit: Ariel Jerozolimski [file])
Bread 224.88
(photo credit: Ariel Jerozolimski [file])
The price of basic products under state supervision went up by one percent on Wednesday morning following the value added tax (VAT) hike to 16.5%. Due to the decision approved in the Knesset two days ago, the price of common dark bread now stands at NIS 4.63 a loaf, while a kilogram of salt now costs NIS 1.78. In addition, due to the increase in oil prices, the price of fuel in Israel went up at midnight by 21 agorot per liter. Water also became significantly more expensive Wednesday, with every cubic meter over 15 cubic meters used costing NIS 28 instead of the previous eight. The extra tax, instigated by the Water Authority to discourage waste, is still pending Knesset approval, but will be imposed retroactively. Meanwhile, consumer organizations expressed concern that businesses will decide to up prices even further. "This tax increase will lead to other costs and some people will try to jump on the bandwagon and raise their prices by more than one percent," said Yaron Levinson, director of the Consumer Authority. If, in the framework of the Economic Arrangements Bill, VAT is added to fruit and vegetables, their prices will immediately go up by the full 16.5%. Social groups have vowed to continue to fight against the plan.