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The Knesset will not approve the Water Authority's proposed "drought tax" by its planned July 1 start date, said the chairman of the Knesset Finance Committee, Moshe Gafni (United Torah Judaism), yesterday.

The committee discussed the water price increase yesterday, and Gafni said the proposal would hurt many different segments of the population, and "the committee would not pass it." Instead, Gafni established a subcommittee, headed by MK Amnon Cohen (Shas), to discuss the "drought tax" with officials from the treasury and Water Authority, and present its conclusions by July 1.

Water Commissioner Uri Shani told the committee that the levy was meant to encourage people to save water - and not to bring in more revenues for the state.

MK Ronit Tirosh (Kadima) voiced an alternative proposal: "Since it is not a budgetary problem, why do we need a tax? We need to act to educate to stop wasting water by encouraging consumers who do not waste water with a financial incentive," she told the committee.

The Water Authority and the Finance Ministry had asked to levy an additional NIS 20 fee on every cubic meter of water - 1,000 liters or about 264 U.S. gallons - a household uses above its regular monthly water allocation. The proposed water price increase would run from July 1, 2009 to December 31, 2010.

Today, every household is allotted 15 cubic meters of water a month, but those with over four people are allocated an additional three cubic meters per person per month for each family member after the fourth. But the average water usage in Israel is five cubic meters per person per month, and 30% of present water consumption would be charged at the new high rate.

MK Uri Maklev (United Torah Judaism) said the greatest harm would befall large families, who use large amounts of water. "Based on the present proposal, 97% of Israeli citizens would receive fines, and in particular large families," said Maklev. He also protested the Water Authority's decision to publish newspaper ads stating the levy would start on July 1 before receiving Knesset approval. "We are sitting here discussing something already advertised in the papers. That is contempt of the Knesset," he said.

MK Shai Hermesh (Kadima) said the proposed model has no economic logic, saying the residents of well-off towns such as Savyon and Kfar Shmaryahu use an average of over 11 cubic meters per person a month - and the new tax would not apply to them. But residents of poor neighborhoods would have to pay. "There is no saving of water here, but a billion shekels for the treasury," said Hermesh.

The new levy is included in the proposed Economic Arrangements Law passed by the Knesset in its first reading.