Photo Credit: Olivier Fitoussi/Flash90
Prime Minister Naftali Bennett with Finance Minister Avigdor Liberman in the Knesset, September 2, 2021.

Prime Minister Naftali Bennett attended a Sunday night meeting of Finance Minister Avigdor Liberman with his staff on Israel’s rising cost of living. The Finance Ministry folks have told the press they don’t remember any time in the past when the prime minister made a pilgrimage to his finance minister, which suggests how seriously Bennett is taking the rising costs, a hot topic he at first very studiously ignored in public to avoid being connected to the crisis, but finally deliberated at length during his earlier cabinet meeting.

Both Bennett and Liberman would not reveal what agreements had been reached during the unusual meeting, they only said that various ideas had been raised that would be examined by the Finance Ministry in the coming days.


PM Bennett supports the reduction of taxes on the weaker segments of the population and reportedly pushed this idea at the Finance Ministry. The tax authority will come up with a formula for reducing income tax only for earners up to $3,434 per month, or $41,000 annually, which is approximately the average wage in Israel. But framing the reductions this way would inevitably award a tax reduction on the first $41,000 of people making much more.

Other ideas that are expected to be examined this week are: raising the price of electricity by only 2% instead of 5.7% while subsidizing the balance of the price increase by the government; reducing the excise tax on fuel by 7% -10%, so that the price of a liter of 95 octane fuel would be cut by 40-50 agorot, after rising by 34 agorot last week; elimination and reduction of tariffs on dozens of imported food products, including beef, chicken, vegetables, fruits, and dairy products.

The Competition Authority will be required to examine which foods are still under the monopoly of some companies, and take steps to stop the monopoly. One of the options would be to force large companies to sell their subsidiaries to increase competition.

At the cabinet meeting Sunday morning, Bennett said that “in the coming days we will present to the public a series of steps to ease the cost of living in the country. I hope that there will be good news soon, especially vis-à-vis food prices. These are things that will have an immediate effect. Several braking measures have already been enacted regarding the marketing chains and importers, and for this, I would like to commend Finance Minister Avigdor Liberman and Economy and Industry Minister Orna Barbivay.”

Bennett noted that “the global rise in prices is a more moderate blow to Israel relative to other countries but we feel it all too well because it is on top of very high prices from the outset. In recent years, the basic cost in Israel has gone up, and buying power has gone down, relatively speaking, in the past 10-15 years. Therefore, we need to take a holistic approach on this matter.”

He added: “I am pleased to see that the public understands the importance of prudent and critical consumerism even as we in the government are opening impediments and increasing competition. In the end, what lowers prices and facilitates service is always the same thing – competition, competition, competition. No force of nature is stronger than this. I remember as the CEO of a company when I had a monopoly for a certain time, prices were naturally higher, and as soon as the competition was opened up, the prices came down.

“Therefore, beyond the short-term actions, the solution is to locate those pockets without competition and create competition in them. We need every government minister here. We must lighten regulation and open the market to competition. Do not be afraid, be daring, mainly in the area of standards. A standard that is good in Germany or Sweden is also good enough for Israelis. There is no justification for the 150% gap, for example, in the price of toothpaste. I remember when, as Economy Minister, I lowered the price of yellow cheese. How was this done? I simply opened the cheese market to imports and competition. Yellow cheese – kosher, of course – came in from Poland and also lowered the prices of Israeli cheeses.

“We must look at this situation as an opportunity. There is an opportunity here to be brave, to deal with long-term structural flaws that have led to a decade of price increases. This government has an extraordinary opportunity to lessen the influence of lobbyists and interested parties and act for the public good, for the good of all citizens of Israel. With God’s help, this is what we will do.”


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