Israel on Thursday approved the draft of the reform on importing regulations designed to permit more products to be sold in the country and reduce the cost of living.
The portion of the reform relating to food was passed by the Knesset Economics Committee on Wednesday. Other parts dealing with home appliances, electronics, children’s products, home products and leisure items were approved Thursday for inclusion in the Economic Arrangements Law (EAL) accompanying the state budget for 2021-22.
The first of three readings of the EAL and budget was passed in Knesset in September, before the holiday recess. The coalition plans to place 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 approving the budget is November 14, but the coalition decided to start the debates early to leave time for unforeseen delays.
If the budget is not passed by November 14, the Knesset will automatically be disbanded and new elections will be held.
As Israel has not had a budget for more than three years, the proposed one is full of ambitious projects and reforms, including many that were quite controversial. However, the coalition has worked hard to avoid infighting and made passing the budget its top priority. The budget is now widely expected to pass.
The import reform would aim to reduce the cost of living by reducing the regulatory and bureaucratic burden placed 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 further inspections here.
Such excessive regulation means many products are delayed or even blocked from reaching the market here, and adds significant costs for importers. Many products cost two to three times more in Israel than in the EU, the Economy Ministry noted.
Marketing costs for imported foods like cheeses, yogurts, frozen vegetables and fruits, canned foods and beverages would come down. So would those for tens of thousands of products like toys, electronics, cosmetics and toiletries, and much more.
WHILE THE reforms would save money for importers, it remains to be seen how much of those savings will be passed on to consumers.
“We are working to open markets, remove barriers, and create competition for product range and price and we expect consumers to benefit from these reliefs,” said Economy Minister Orna Barbivay. “By making it easier for importers, both in bureaucracy and import costs, we expect these savings to be reflected in the final price to the consumer.”
Under the reform, importers will be able to simply declare about 80% of products upon arrival, instead of submitting them to a backed-up inspection process at the Israel Standards Institute. European and other foreign standards would be accepted regarding the safety of food and products. Parallel imports will be allowed for cosmetics for the first time, allowing retailers to buy 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 Manufacturer’s Association president Dr. Ron Tomer. “I welcome the approval of the reform and especially thank the chairman of the Knesset Economics Committee, Michael Biton, and the finance minister who managed to lead the reform while preserving the principles and interests of all parties involved, and followed a policy of comparing conditions between Israeli and foreign manufacturers to make sure that Israelis will not be harmed. This is in addition to granting relief to importers and significantly reducing the scope of regulation and bureaucracy in the field.”
Other reforms were also up for discussion Thursday.
The hotly contested reform to raise the retirement age for women from 62 to 65 was allocated another 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 enable Israelis to compare costs of different financial services, was approved by the Knesset Economics Committee Thursday. The reform, which has been in the works for some five years, would come into effect as early as June 2022.
Also Thursday, Finance Minister Avigdor Liberman signed into law a tax on sugary beverages intended to encourage consumers to choose healthier options. Drinks with high sugar levels, including soft drinks and the grape juice that many religious Jews use for kiddush on Shabbat, will be taxed a shekel per liter. This tax was previously included in the EAL, but was separated out as a separate bill in September.
The tax will go into effect January 1.