PM: Remove Duties on Food to Solve 'Price Crisis'

Prime Minister Netanyahu called for the removal of import duties on many kinds of imported food products.

Yaakov Levi ,

Israel news photo: Flash 90

Prime Minister Binyamin Netanyahu on Sunday said that one of the keys to solving the “price crisis” in Israel was to remove import duties on many kinds of imported food products. Doing so, he said, would increase competition and force Israeli food manufacturers to make do with less profit.

Israel has relatively high import duties on many manufactured food products; in addition, the country significantly limits the amount and kind of products that can be imported. These limitations were imposed to protect Israeli growers and producers, in order to ensure that the country was able to remain self-sufficient and not become dependent on imported food.

However, the limits on imports have given many large food producers who dominate the market in specific areas license to keep prices artificially high – because they have no significant competition, according to many economists. Netanyahu has apparently adopted this point of view, as this is now the first time he has made a statement on an issue that has for years been a matter of sharp debated in the Knesset and among ministers.

Although Netanyahu did not put forth a comprehensive plan, economists said that he would likely adopt the European model of market competition on food products – allowing the more or less free import of products, while subsidizing Israeli companies subjected to lower prices that are likely to ensue from the “dumping” of products foreign companies are expected to engage in in order to build up market share.

Another advantage for the Prime Minister in proclaiming his support for more food imports and less import duty is a political one, observers said. Speaking Sunday, Netanyahu said that changing the import duties or the amount of imports did not require any government or Knesset action, but could be implemented by the Finance Minister. Netanyahu on Sunday asked Harel Locker, head of the Prime Minister's Office, to work with Finance Minister Yair Lapid on a plan to implement his vision.

The move, say observers, could be problematic to Lapid, who is opposed to such changes – making him the “bad guy” in the eyes of voters, at least on this issue, they said,