In his first act on Sunday, Finance Minister Bezalel Smotrich ordered ministry officials to reverse tax hikes on single-use plastic items and sweetened drinks introduced by his predecessor Avigdor Liberman.
At his first working meeting as finance minister, Smotrich instructed officials “to prepare orders as quickly as possible in the coming days to scrap the single-use plastics tax and the sugary drinks tax introduced by the outgoing government,” the finance ministry said in a statement.
Smotrich told officials early in the meeting that he had “great confidence in them and their staff.”
“There will be an open and deep dialogue between us, and professional decisions will be made to boost Israel’s economy for the benefit of all Israeli citizens,” he said, according to several Hebrew media outlets.
Ultra-Orthodox Israelis found the tax hikes – aimed at preventing harm to health and the environment – particularly targeting them because of their reliance on such products.
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Haredi lawmakers hailed Smotrich’s move after repeatedly railing against the taxes and demanding in coalition talks that the government roll them back.
According to the Israel Tax Agency, the fee waiver will result in an annual loss of NIS 1.2 billion (US$340 million) in tax revenue for the state treasury.
Incoming Finance Minister Bezalel Smotrich, left, shakes hands with outgoing Minister Avigdor Liberman during a handover ceremony at the Treasury Ministry in Jerusalem January 1, 2023. (Yonatan Sindel/FLASH90)
United Torah Judaism MP Moshe Gafni praised the decision to reverse “the Liberman tax.”
“This was one of our promises to do so immediately with the formation of the government and I am very happy about that,” he said.
UTJ MK Uri Maklev said once the tax is scrapped, “we will act in public campaigns and education to protect the environment and consume healthy drinks.”
However, the decision was orchestrated by former Environment Minister Tamar Zandberg, who accused the government of “allowing petty policies to destroy the environment and health”.
“Rather than going forward, this decision sends us back light years,” Zandberg said, adding that the decision “would only add to pollution and disease.”
The Israel Union for Environmental Defense also charged that the decision “damages public health and decrees that the State of Israel will become a major landfill.”
The Israeli Association of Public Health Physicians called the withdrawal “unfortunate and blind” and said that despite claims the tax was targeting the ultra-Orthodox, “data from the Treasury and Health Ministries show the tax has led to a drop in consumption [of sweetened drinks] for the benefit of Israelis, including the ultra-Orthodox population.”
Prof Nadav Davidovitch, head of health policy at the Taub Center for Social Policy Studies, told public broadcaster Kan: “This is not a Liberman tax and it is not anti-Haredi, it is pro-Haredi. It’s a shame that politicians play a cynical game with people’s lives.”
The outgoing ministers held handover ceremonies with their successors in Prime Minister Benjamin Netanyahu’s newly sworn government on Sunday.
Outgoing Finance Minister Avigdor Liberman (right) speaks with incoming Minister Bezalel Smotrich at a handover ceremony at the Treasury Department in Jerusalem January 1, 2023. (Yonatan Sindel/FLASH90)
During his meeting with Smotrich, Liberman warned that the Treasury’s role is not just to “guard the coffers,” but to generate revenue to create a runway that allows for more free action on budgetary decisions.
Liberman appeared to be referring to coalition agreements signed by the new government aimed at increasing welfare benefits for the ultra-Orthodox, whose employment rate is low.
Smotrich promised to largely continue the pro-market policies of his predecessor and “to increase competition as much as possible”.
“I’m not sure all of our moves will be popular, but hopefully over time they will prove correct,” he said.
Smotrich takes over from Liberman as Israel’s economy is expected to slow significantly this year and the cost of living is set to rise, led by property and energy prices. Prices for a range of basic services and products rose at midnight, burdening consumers with large increases in the cost of petrol, water and electricity, among other items.
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