A key Israel business group demands a drastic cut in the food tax

By Steven Scheer

JERUSALEM (Reuters), – Israel’s Manufacturers Association proposed tax cuts for food on Sunday. This was in addition to a host other measures that were intended to increase economic competitiveness and address high living costs.

The economic plan of the Association, presented to Israel’s prime Minister and ministers in finance and economy, suggested lowering the value added tax (VAT), on food, to 9%, which is the average for OECD countries. It was previously 17%.

The group, which includes approximately 1,500 businesses and 400,000 employees, also suggested increasing state funding to research and development to 0.5% and reducing excess regulations by 25%. Vocational training was also recommended to increase labour productivity.

The Association stated that if implemented, these measures would allow Israel’s manufacturing industry to invest in new technologies and workforce development, which will drive sustainable growth and keep Israel competitive globally.

Ron Tomer, President of the Association, said that the economy has been slowing and that employment levels have declined while production costs are on the rise. However, he pointed out that Israel’s inflation and economic activity was better than those of other countries Israel competes in foreign trade.

He stated that “we must use these relative advantages to lead the Israeli economic growth to growth already this calendar year.” “The government should formulate a well-thought-out economic and social plan to support this.”

Israel’s economy is expected to grow by 2.8% by 2023, compared with 6% in 2022. From 5% to 3%, inflation is expected to decrease to 3%.

The new Israeli government is currently drafting a budget for 2023 that must be approved by all lawmakers by May.

Nir Barkat, the new economy minister, has stated that he will ease the “unbearable burden” on Israeli businesses. He declared a “war against regulation”, which he described as “a cancer on Israel’s economy”.

Last week, Benjamin Netanyahu, the Prime Minister, and Bezalel Motrich, the Finance Minister, announced that Israel would cancel or reduce recent increases in property taxes, water, and energy costs. This was part of preliminary measures to lower inflation.

(Reporting by Steven Scheer. Jane Merriman edits

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