In a nationally televised press conference Wednesday evening, accompanied by Israel’s Minister of Finance Bezalel Smotrich, Prime Minister of Israel Benjamin Netanyahu unveiled a new plan on Wednesday that he says will help Israelis cope with the continuing problems with inflation. The plan includes reversals of recent increases in the price of electricity and gasoline, among others. However, it is not clear how the plan will dramatically alter the effects that the continuing global financial crisis and inflation are having on Israel’s local economy.
In announcing his new plan and the steps his government will take on inflation, Benjamin Netanyahu declared that the fight against the cost of living is at the top of his government’s priorities.
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“We will not wait,” he said. “It is important for me to emphasize that these steps will immediately reduce the monthly expenditures of every family in Israel and that these steps will also do something else – they will slow the pace of the price increases and will begin to turn things around.”
On the cost of energy in Israel, electricity rates jumped 8% in Israel on January 1st. Netanyahu said that he would reduce that increase, down to only 2% above the price at the end of 2022. He will cover this by reducing taxes on coal.
The Prime Minister added that he expects his steps to reduce the overall increase in the price of electricity per household by approximately 70%. For small and mid-sized businesses, the planned steps will lead to the complete cancellation of the increase in the price of electricity.
The plan also includes reversing increases in water prices, reduced by an amount similar amount to the reduction in the price of electricity. The price reduction will be covered by the cancellation of the national water carrier’s dividend and by cuts in the price of electricity.
Netanyahu also offered assistance to the economically disadvantaged in dealing with the cost of living. This assistance will include the payments of subsidies for home heating now, instead of at the end of the year.
The heating grant is NIS 608 ($173 million) and is paid to around 300,000 elderly who are entitled to income support or disability payments.
Increases in the price of gasoline will also be frozen and the excise tax on fuel will be reduced by NIS 0.10 per liter (roughly ten Cents a gallon) by the end of 2023.
Finally, Netanyahu promised to enact a freeze on property taxes.
Individually these steps may not be much, but collectively they could value thousands of Shekels in savings per household over 2023.
In addition to these steps, automatic compensation mechanisms, which increase households’ available income, took effect this month. However, these are not attributable to any actions taken by Israel’s new government as they took effect automatically according to pre-standing guidelines.
There were also a number of small tax reductions enacted this month.
Now, Israelis will need to wait and see what, if any, effect all of this will have on the overall cost of living and inflation in their country.
