Shalom Simhon
Photo: Dudi Vaaknin
Agriculture minister: VAT on produce detrimental to market
Simhon warns imposing value added tax on fruits and vegetable sales will have radical effect on structure of agriculture in Israel
Agriculture Minister Shalom Simhon warned Tuesday that imposing value added tax (VAT) on fruits and vegetable sales would create a 20-year setback for Israel's produce market.
Farmers have been traditionally exempt from the tax and imposing it at this time is one of the Treasury's suggestions for the next State budget, meant to help the marker weather the financial crisis.
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Finance Minister Yuval Steinitz defended the highly controversial move recently, saying that the lack of it was "a taxation irregularity that should have been dealt with a long time ago and it will not injure the low socioeconomic stations."
Speaking before the Knesset's Finance Committee, Simhon said that the VAT would cause considerable losses to farmers, and that "farmers will not be inclined to grow high quality produce if they know they will lose money over it."
Such taxation, he told the committee "is a social issue bearing a radical affect on the structure of agriculture in Israel, which is why I opposed rescinding the (tax) break." According to data presented by the Treasury, he added, the farmers would have to shoulder up to 30% of the tax, amounting to nearly NIS 500 million (roughly $127.8 million) a year; an amount Simhon called "unrealistic."
