Prime Minister Binyamin Netanyahu said Monday morning that he intends to propose a bill for 0% VAT on the basic foodstuffs whose prices are under supervision.
The new initiative will replace former Finance Minister Yair Lapid's signature bill that called for 0% VAT on housing for young couples. Netanyahu fired Lapid, who is Yesh Atid Chairman, and now he says that he never really believed in that bill.
"It is no secret that I was not an adherent of 0% VAT (on housing), a plan that could wind up raising the prices of homes instead of lowering them,” Netanyahu said at a conference hosted by Globes. That discount, he said, would benefit 9 to 14 thousand people annually, at best, and these would mostly be from well-to-do families, who are capable of making an advance payment of hundreds of thousands of shekels on a home.
“There is an alternative that I intend to advance – 0% VAT on basic foodstuffs – a benefit that reaches millions of citizens annually.”
The discount would make basic foodstuffs that are under supervision about 15% cheaper and save every family hundreds or thousands of shekels every year. Netanyahu promised to take immediate action to legislate the law. The move will cost an estimated 2 billion shekels, compared to about 3 billion shekels that Lapid's plan would have cost.
The remaining money saved from the budget by cancelling Lapid's 0% housing benefit will go to doubling the benefit given to soldiers ending their mandatory military service, Netanyahu vowed.
Netanyahu's announcement appears identical to one of the key policy promises of the Sephardic-hareidi Shas party, whose leader Aryeh Deri has declared he would not enter any future government which did not adopt such measures on basic goods. In essentially adopting Deri's position, Netanyahu appears to be positioning himself for the possibility of including the hareidi parties - or at least Shas - in any future government headed by him.
Election ploy or not, it will be seen as a welcome announcement by many Israelis concerned with the country's notoriously high cost of living.