The passage of the budget and the Economic Arrangements Law will directly affect almost everyone in Israel, for better or worse. Minister of Finance Avigdor Liberman has repeated his assertion that the budget is the most socially-minded in Israel's history. It does, however, include several austerity measures, which contradicts earlier statements by Liberman to the effect that there would be no tax increases in the 2020-2021 budget.
So how will the budget affect our pockets and quality of life? It depends. For example, we'll pay more for disposable utensils, sweetened beverages, parking in cities, and, from 2025, we'll pay to enter Tel Aviv in a private vehicle. On the other hand, the reform on imports that will come into effect in six months' time should mean greater price competition in food, cosmetics, and other items.
More hospital beds
The increase in the health budget is partly meant to cover expenditure incurred because of the Covid-19 pandemic, but is it also for employing more doctors and nurses and increasing the number of hospital beds. Queues in the health system will not become shorter from tomorrow morning, since doctors and nurses can't be created out of nothing, but things should get better in the long term. The money released in the 2021 budget will allow more places for medical and nursing students, which will mean more medical staff in the coming years.
An important element in the quality of life in Israel is transport, which will be dealt with through the plans for developing the railways, upgrading bus services, and getting the Tel Aviv metro project underway - setting up the authority to manage the project is part of the Economic Arrangements Law.
Here too, the traffic jams will not disappear tomorrow, but some relief is on the horizon, such that alongside the congestion charge and higher parking costs in cities, people will also have the alternative of leaving their cars at home.
Another impact of the budget and the Economic Arrangements Law is on women, for whom the retirement age will gradually rise from 62 to 65 over eleven years. The Economic Arrangements Law contains several measures designed to prevent financial harm to women as a result of the change.
A solution to rising produce prices?
The Ministry of Finance's plan to open the agricultural produce market to imports from overseas will have an effect on the continuing rise in prices of fresh fruits and vegetables. At the same time, farmers will receive a subsidy in accordance with the area of land they work, to enable them to compete with imported produce.
The agriculture reform is not part of the Economic Arrangements Law, because the minister of finance and the minister of agriculture can jointly decide to reduce customs duties without the need for any law. It was therefore decided that negotiations on the amount, nature, and conditions of the subsidy would take place after the budget was passed.
Another impact on food prices will come from the kashrut reform. The kashrut certification monopoly will be taken away from the rabbinate and privatized. In a report by the Ministry of Finance form previous years, the cost of the kashrut monopoly is estimated to cost NIS 2.8 billion annually and to account for 3% of the total price of food.
Published by Globes, Israel business news - en.globes.co.il - on November 8, 2021.
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