“We have absorbed a lot of difficulties and decrees,” says Meir Yifrach of the Vegetable Growers Association, “but this time we won’t sit quietly.”
The two-year budget proposal for 2009-10 that was recently passed by the Cabinet contains a controversial clause applying the 16.5% Value Added Tax (VAT) on fruits and vegetables. For a family spending 400 shekels ($100) a month on fruits and vegetables, this means an added monthly expenditure of 66 shekels – a significant amount for a budget whose main public-interest angle was the extent it would harm the weaker classes.
“This time, they have gone too far,” Yifrach said. “There appears to be no limit to their chutzpah and irresponsibility. Someone up there in the higher levels has decided to totally destroy Israel’s agriculture.”
VAT: The Final Nail
Agriculture in Israel is suffering of late from a sharp decline in demand and in prices on both international and domestic markets. Yifrach says, “We are a sector that has suffered many hardships and decrees: High taxation on foreign worker employment, a credit crunch, the weakening of the periphery where most of the farmers live, and the closure and bankruptcy of many farms. So now the Finance Ministry boys say, ‘Let’s bang the final nail into the farmers’ coffin – the VAT clause. Not to mention that because of the way vegetables are sold in open-air markets, it will be impossible to collect the VAT.”
Yishai Against VAT
Many coalition members, including Deputy Prime Minister and Interior Minister Eli Yishai (Shas), Minister Avishai Braverman (Labor), and others, have come out against the tax on fruits and vegetables.
On Tuesday, the Knesset Finance Committee is to hold a session on “the expected ramifications of imposing VAT on fruits and vegetables.”
The Finance Ministry is already considering some possible methods of compensation for the tax. These include lowering public transportation prices and increasing income guarantee benefits. At present, however, it refuses to consider simply doing away with the idea of taxing fruits and vegetables.
Yifrach said he hopes that the religious parties, “which represent weaker classes, will not allow themselves to agree to this idea. In exchange for promises of one-time payments, they will agree to cause permanent harm to population sectors of little means, for whom fruits and vegetables are a basic staple.”
“Farmers and produce distributors will torpedo all attempts to implement this idea,” Yifrah said, “assuming it passes the Finance Committee and Knesset. We are able to take decrees, but we have now reached the limit. Our protests and opposition will be wall-to-wall this time. Such a tax for us is collective suicide; we will run one of the biggest and most difficult struggles against it.”