Shas has proposed replacing a tax on fruits and vegetables with several measures that would target the upper classes. Although the Sephardi religious party voted in favor of the proposed national budget in an initial Knesset vote last week, it remains firmly opposed to a section of the proposal that would allow the government to charge value-added tax (VAT) on fruits and vegetables.
Members of the party have spent recent weeks developing counter proposals that would leave fresh produce tax-free. Shas wants to replace the estimated 1.8 billion shekels ($450 million) that the state could gather by taxing produce by freezing salaries and adding taxes in other areas.
Among the alternative solutions proposed by Shas is a three-year salary freeze for public servants making at least three times the minimum wage. The wage freeze would save the government an estimated NIS 100 million $25 million).
Shas head Eli Yishai clarified this week that his party will vote against the national budget in a second and third hearing if the proposed produce tax remains a part of the measure. “Shas cannot support a budget that harms those who are struggling, and a tax on fruits and vegetables is the height of such harm,” he said.
Shas is not the only coalition party which opposes the proposed tax. Members of Labor, United Torah Judaism and Likud have protested the measure as well.
The produce tax also faces fierce opposition from the Vegetable Growers Association and other farmers' groups. The Growers Association describes the proposal as “the final nail into the farmers' coffin,” and says that if implemented, the tax would ruin Israeli agriculture.
Medical associations have criticized the proposal as well, saying it would serve to discourage healthy eating.
Despite criticism of the plan, Finance Ministry officials remain firmly in favor of the tax. “The tax-free status granted to fruits and vegetables was mistaken from the beginning and was the result of political pressure,” officials said this week.
"The Finance Ministry's position is that the Value Added Tax (VAT) in Israel should be equal across the board, and that the VAT is not a social tool,” officials added. The ministry is open to proposals that would reimburse the poor for the added tax, they said.