What' costs the treasury a bundle' is lost work days, disability payments and medical costs for hundreds of thousands of Israelis who suffer the ill effects of metabolic syndrome and diabetes, and their associate health problems. As is well known to anyone who cares to look into it, a main cause of these two conditions is the over consumption of cheap processed starches and sugars, and the under consumption of unprocessed foods like meat, fruit and vegetables (the diet which mankind evolved to eat for its entire history except the last 10,000 years). The poor suffer disproportionately from these two problems, because fruits and vegetables are already expensive compared to processed foods and starches. Removing the VAT exemption for fruits and vegetables will only compound the problem, and end up costing the economy much more than it saves in the long run. (I can't imagine why you think that the supermarket chains will absorb the VAT but cutting their profit margins.)
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from the article: Is Netanyahu trying to snare Lapid in the VAT trap?