Gov’t Panel to Urge Easing of Rules on Personal Imports

Recommendations will cover food, supplements, cosmetics, many car parts and wireless devices, and regularize rules

Amazon's distribution center in Pheonix, Arizona, Nov 22, 2013.
REUTERS / Ralph D. Freso

The interministerial committee working on easing personal imports will recommend lifting charges and restrictions on consumers ordering food, food supplements and cosmetics from abroad when it releases its final report in the next several days.

The proposal is one of a package that the government panel will put forward with the aim of making it easier for Israelis to buy products abroad, breaking the grip of official importers, creating more competition for local retailers and lowering the cost of living.

Among the other rules the committee will make is on the quantity of goods that qualify as personal imports. Its proposed ceiling is either 30 of the same product in a single shipment, or five of the same product so long as the value doesn’t exceed $1,000, whichever is higher.

Among other measures, the number of car parts requiring government approval to be imported would be slashed to just 70 from 20,000 today. The Communications Ministry would be directed to reduce the percentage of wireless products needing approval by 90%.

The panel’s recommendations, which will be subject to a public hearing after they are published, aims to regularize the status of personal imports as a way of preventing customs officials and others from using fuzzy rules to erect barriers, delay deliveries and add costs.

“If a consumer wants to buy a food supplement in the U.S. because it is 50% cheaper, he can order it, and unlike today he won’t have to get the Health Ministry’s approval for each supplement and pay hundreds of shekels,” said a source close to the committee, who asked not to be identified.

“Now, when the delivery company sees that they have a food additive, it automatically stops the shipment and sends someone to handle the permits, which costs a lot of money and time for the consumer. The same is true for cosmetics and other products,” said the source.

Another way the panel will propose making personal imports easier is by setting up a government website that will contain rules and other information consumers need, as well as forms that can be downloaded when approvals are necessary. It will also include tax and customs rates.

The government is seeking to bring down the cost of consumer goods, which several studies have shown are more expensive in Israel than most other countries belonging to the Organization for Economic Cooperation and Development.

It has eased rules on regular imports through legislation like the cornflakes law, and sought to inject more competition at the retail level. But officials have concluded that personal imports are a fast and easy way to achieve the same goals.

With local prices so high, Israelis have taken to buying more and more online from overseas. The Economy and Industry Ministry estimates that online shopping reached 7 billion shekels ($2 billion at current exchange rates), of which 40% was done via overseas vendors like Amazon and Alibaba. That represents a 22% increase since 2013.

But barriers to imported products remain high. The interministerial committee, which is headed by treasury official Shira Greenberg, found that the average Israeli household spends only 10% of its budget on imported products, versus 19% on average in OECD countries – a gap it attributed to import barriers that limit selection and raise prices.

One area the committee has not touched on is the exemption on customs and taxes for personal imports, which is now set at $75, compared with $200 in most Western countries.

A battle has been brewing on that issue for some time, with the Economy Ministry and the Antitrust Authority supporting an increase and the Israel Tax Authority opposed.

Finance Minister Moshe Kahlon will ultimately decide on the issue, but the Economy Ministry hopes to build its case with a study it has commissioned from an outside consulting firm to measure what harm a higher exemption will have on local business, especially small ones.

The Tax Authority said it would be significant and that other countries, most notably Australia, have been rolling back exemptions as they come to recognize the damage it does to local business.