The host of measures the government announced on Wednesday aimed at tackling the surging cost of living in Israel are vital and their positive impact on Israeli pockets are expected to be felt in the coming days.
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The prices of consumer goods in Israel are significantly higher than in other developed countries, and the latest surge that came as a result of the global crisis was the straw that broke the camel's back.
Prime Minister Naftali Bennett, Finance Minister Avigdor Lieberman, and Economy Minister Orna Barbivay have decided to lower taxes on a variety of consumer products, which, in the long run, is meant to reduce prices of imported products, affecting those produced in Israel as well.
One of the reasons for the most recent spike in prices is the government's decisions to raise taxes at the height of the crisis, such as on disposable plastic tableware and all sugary drinks. This may have been a mistake in terms of timing, although the taxes themselves are valid. However, let us give credit where credit is due: the lawmakers are aware of the public's distress and prepared the current plan swiftly.
And yet, there is also criticism. According to the outline, the household income of families with children ages 6-12 will increase without conducting an income test. Meaning, parents will receive 223 shekels ($70) per child regardless whether they earn NIS 10,000 ($3,000) or NIS 40,000 ($12,000) a month.
The plan costs the government over two billion shekels ($620,000), and had they done it correctly, more benefits could have been awarded to the middle and lower classes.
Lawmakers have also decided to do away with the excise tax on coal, which will moderate the increase in electricity tariff already this month. This is crucial, because the electricity tariff not only affects the expenses of each household but also those of manufacturers and importers, thus, raising the cost of living.
However, the excise tax on gas also has a significant impact on the cost of living, yet it is not included in the government's latest plan, supposedly because it goes against its carbon tax policy. Does the cancellation of the excise tax on coal not contradict this policy?
Organizations representing self-employed Israelis harshly criticized the measures because they did not include compensation for business owners whose livelihoods were affected by the Omicron coronavirus infection wave.
Moreover, large expenditures – housing, rent, mortgages – were also not taken into account. Rising real estate prices are an acute problem that requires a long-term solution, and the housing plan the government presented at the end of 2021 will probably not provide one.
The bottom line is that this is the government's first plan that will, hopefully, herald many more thorough and extensive ones. It does not matter whether such measures are prepared as a result of public pressure or the goodwill of the government. What is truly vital is finally addressing the chronic national problem Israel has suffered from for over a decade: a high cost of living.
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