Treasury Wants to Fast-track Tax Cuts for Food

Finance Ministry wants to abolish customs on imported food products that aren't also produced in Israel.

The Finance Ministry wants to lower import taxes on food as early as this month and is therefore trying to wrest the issue away from the government-appointed food committee. The committee, charged with finding ways to lower food costs, is scheduled to deliver its recommendations only in three months.

Sources near the Finance Ministry say the Tax Authority has all but finished drafting a list of items on which customs can be abolished or reduced. The Finance Ministry wants to abolish customs on imported food products that aren't also produced in Israel. However, some items with Israeli competitors will also be on the list.


Currently, import taxes are charged on the following products that are not produced in Israel, among others: fresh baby corn, ginger, certain types of mushrooms, desiccated coconut, Brazil nuts, chestnuts, pine nuts, raisins, black and white peppercorns, crushed and ground pepper, oatmeal, corn starch, cassava starch, poppy seeds, pumpkin seed oil and dried papaya.

For some other items with Israeli competitors, the import tax is so high several times their base price that nobody bothers to import them at all. In these cases the Finance Ministry wants to lower the tax so that importers can create competition in the local market.

Don't expect a steep drop tomorrow, though: The plan is to make the changes over three years.

The Food Committee is headed by Sharon Kedmi, director general of the Ministry of Industry, Trade and Labor. He supports the Finance Ministry's positions on abolishing import tax on foods that local competitors, and reducing import tax on food in general over the next few years.

Food companies are not pleased, however, and have been pressing the Industry and Trade Ministry to block any changes at least until the global economic crisis is over, so they can prepare and avoid layoffs.

The Finance Ministry, unmoved, rebuts that import tax has to drop to introduce competition so that the companies lower prices to consumers. Potential layoffs should be addressed on a case by case basis, the ministry says.