Import, banking reforms approved ahead of Knesset budget debates

Israel on Thursday approved plans to reform import regulations aimed at allowing more products to be sold in the country and lowering the cost of living.

The part of the reform relating to food was voted on Wednesday by the Knesset’s economic committee. Other parts dealing with home appliances, electronics, children’s products, household products and leisure items were approved on Thursday for inclusion in the Economic Arrangements Act (EAL) accompanying the budget of the Status for 2021-2022.

The first of three readings of the EAL and the budget was passed in the Knesset in September, ahead of the recess. The coalition plans to table the latest version of the budget on the Knesset table on October 31, with a week of marathon deliberations to follow before the final two votes. The deadline for budget approval is November 14, but the coalition has decided to kick off debates early to allow time for unforeseen delays.

If the budget is not passed by November 14, the Knesset will automatically be dissolved and new elections will be held.

As Israel has not had a budget for over three years, the proposed one is full of ambitious plans and reforms, many of which were quite controversial. However, the coalition worked hard to avoid infighting and made passing the budget its top priority. The budget is now expected to pass.

An empty Knesset plenum on October 4, 2021 (credit: NOAM MOSKOVICH)

Import reform would aim to lower the cost of living by easing the regulatory and bureaucratic burden on importers, who are required to submit products to Israeli standards committees even if they have already been approved in other countries. Under the new legislation, products that have been authorized for use in developed countries would not require additional inspections here.

Such excessive regulation means that many products are delayed or even prevented from reaching the market here, and adds significant costs to importers. Many products cost two to three times as much in Israel as in the EU, the Economy Ministry noted.

The costs of marketing imported foods such as cheeses, yogurts, frozen fruits and vegetables, canned foods and beverages would decrease. The same would be true for tens of thousands of products like toys, electronics, cosmetics and toiletries, and much more.

ALTHOUGH the reforms would save money for importers, it remains to be seen how much of these savings will be passed on to consumers.

“We are working to open markets, remove barriers and create competition for product range and prices and we expect consumers to benefit from these reductions,” said Minister of the Economy Orna Barbivay . “By making it easier for importers, both in terms of bureaucracy and import costs, we expect these savings to be reflected in the final price to the consumer. “

As part of the reform, importers will simply be able to declare around 80% of products on arrival, instead of subjecting them to an inspection process backed by the Israel Standards Institute. European and foreign standards would be accepted with regard to food and product safety. Parallel imports will be allowed for cosmetics for the first time, allowing retailers to purchase from sources other than the manufacturer’s official channels.

“The approved import reform will allow fair competition that will not discriminate against Israeli industry,” said Manufacturers Association president Dr Ron Tomer. “I welcome the approval of the reform and especially thank the Chairman of the Knesset Economic Committee, Michael Biton, and the Minister of Finance who have managed to lead the reform while safeguarding the principles and interests of all parties. concerned, and have followed a policy of comparing conditions. between Israeli and foreign manufacturers to ensure that Israelis will not be harmed. This is in addition to providing relief to importers and significantly reducing the scope of regulation and bureaucracy on the ground.

Other reforms were also under discussion Thursday.

The hotly contested reform to raise the retirement age for women from 62 to 65 received an additional NIS 300 million as part of a compromise to get it approved.

The final text of the open banking reform, which will make the banking sector more transparent and allow Israelis to compare the costs of different financial services, was approved by the Knesset’s economic committee on Thursday. The reform, underway for about five years, would come into force in June 2022.

Also on Thursday, Finance Minister Avigdor Liberman enacted a tax on sugary drinks intended to encourage consumers to choose healthier options. Drinks with a high sugar content, including soft drinks and grape juice that many religious Jews use for kiddush on Shabbat, will be taxed at one shekel per liter. This tax was previously included in the EAL, but was split as a separate invoice in September.

The tax will come into effect on January 1.

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