The government's Ministerial Law Committee decided Sunday to approve a bill that will freeze, if not eliminate, the "drought tax," but Israelis are going to be paying much more for water anyway. And as a result, says the National Insurance Institute (Bituach Leumi), thousands of Israelis will be driven into poverty by the higher water prices, set to be instituted on January 1.
The Knesset is set to vote Wednesday on the first reading of a bill that would temporarily freeze collection of the excess water use tax, which was instituted in July. After much public pressure both from inside and outside the government, officials said Friday that they would move to freeze the tax. The law will be put on a fast-track for approval, and observers said it was unlikely the unpopular tax would be revived.
But separately, the Water Authority is raising the price of water for all users, instead of just taxing excess use at a high rate. The price of water is set to rise by 40%, a development the NII said Sunday would prove to be too great a burden for many Israeli middle-class families to handle.
According to the figures, the average Israeli family currently spends NIS 114 per month on water, a sum that will rise to NIS 160 per month. However, according to the NII, the price rise will hurt poor and working families much more harshly; the average family in the lowest income decile spends NIS 100 per month on water, compared to NIS 140 for the wealthiest families. And while wealthy families will see their water bill rise to by NIS 55 a month, poor families will be paying NIS 40 more, a burden they will be unable to handle, the NII said.
Middle class families will see their available funds for discretionary spending fall by 0.5% as a result of the price rise, while wealthier households will lose out on 0.2%-0.3% of their current income. Meanwhile, those at the very bottom of the socioeconomic ladder will see their available funds decline by 1.4%, and those at the next level of the scale would lose 0.9% of the money they have available now.
As a result of the report, Welfare Minister Yitzchak Herzog said he would demand a government discussion on the consequences of the water price rise and its effect on poor families. "The decision to raise water prices was made without a government discussion or an evaluation by the Welfare Ministry or the NII," said Herzog. "It is unreasonable and unacceptable to raise prices like this on an essential element like water."