By Erin Viner
Israel will cancel or cut back recent hikes in property taxes, water and energy costs, the Premier announced at a televised news conference alongside Finance Minister Bezalel Smotrich.
Noting that every increase in costs “affects families,” Netanyahu said that his government “must turn the wheel around now. We cannot wait until the budget discussions” to combat the “inflationary spiral.”
Israel has an official annual target of 1% to 3%.
This past year, Israel posted a budget surplus of ₪9.8 billion shekels (about $2.8 billion or €2.591 billion) reflecting 0.6% of gross domestic product, which the Finance Ministry said was the first annual surplus in decades. There were GDP deficits of 4.4% in 2021 and 11.3% in 2020.
Pledging that his new government would maintain fiscal responsibility as it implements its new plan, Netanyahu introduced measures to subsidize the cost of gasoline, freeze increases in property tax and lower expected price hikes for electricity and water.
The measures will be in force for a one-year period – after which the government will be forced to reassess the situation and act accordingly.
“We are now inserting a stick into ‘the wheel of inflation,’ said the Israeli leader, detailing that property tax rates will be frozen for a year; while the last spike in prices will be reduced by the equivalent of 29¢ or €0.027 per liter of fuel, reduce the increase in the prices of electricity and water by 70%, while facilitating the rise of electricity costs to 2.5% rather than the previously-declared 8%.
In addition to the cited emergency measures, Finance Minister Smotrich said preparations are underway to introduce expansive reforms within the state budget aimed at increasing competition while simultaneously reducing bureaucratic red tape and regulations over time.
The Manufacturers’ Association, which represents about 1,500 companies and 400,000 employees, called the government’s plan “a first step in the right direction to lower the cost of living and increase economic growth.”