Hundreds of produce-stand owners from open-air markets around the country converged on the Knesset Tuesday morning. The vendors gathered to demonstrate against the government's intention to impose a value-added tax (VAT) of 16.5 percent on fruits and vegetables.
The controversial clause in the two-year budget proposal for 2009-10 recently passed by the Cabinet means that families spending NIS 400 a month on fresh produce would have to add NIS 66 to the bill, just for the sales tax.
The demonstrations coincide with a meeting of the Knesset Finance Committee on the ramifications of the measure. The committee is talking to Finance Ministry staff, as well as to members of consumer advocacy organizations and members of the agriculture lobby.
Vendors at Jerusalem's Machane Yehudah open-air market told Israel National News late last week they believed it would be impossible for the government to accurately track and collect the tax.
"How can they do it? They don't have enough manpower, for one thing," said one vegetable stall owner, who requested anonymity. "It's too complicated, with prices changing all day long," said another. "For us, this is a nightmare."
This the first time the government has tried to impose a tax on fresh fruits and vegetables. The budget also calls for an across-the-board hike by one percent in the current 15.5 percent VAT on all non-food items, further depressing family finances.
According to the Central Bureau of Statistics, families in the lowest income bracket spend more of their income on fresh produce – 3.5 percent – than do their higher-income counterparts, who spent only 1.5 percent of their income. The statistics make it clear that the proposed tax will be far more damaging to the poor than to the wealthier sector of the population.
"You think the prices are high now?" warned the stall owner in Machane Yehuda. "Wait till next week."