Prime Minister Benjamin Netanyahu's
announcement that he plans – if and when he creates the next government – to eliminate value added tax on a limited number of supervised food products is overt election economy.
It's an election economy with no practical explanation or professional backing. Its only goal is to lure voters and buy their support at the polls for a bargain price.
For those of us who have forgotten, we should remember that after establishing his government in 2009, Netanyahu suggested an opposite move aimed at eliminating the VAT exemption on fruit and vegetables. It was only the public opinion's outcry that led to its shelving.
Later on, Netanyahu firmly rejected proposals, and even hints of proposals, to reduce the VAT on food products and basic services, like in most European countries. When the issue was raised before the Trajtenberg Committee, it was overruled by economists from the Treasury and from the Prime Minister's Office.
Not so long ago, Netanyahu raised his hand in the Knesset against a similar bill initiated by former minister Amir Peretz.
When did the hidden ideological change in Netanyahu's stance take place? When did he start supporting a move which is against his beliefs and economic outlook? After preliminary talks with the leaders of the ultra-Orthodox Shas party.
Shas was the party which raised the demand for zero VAT on supervised food products as a condition for supporting different Likud initiatives, before and after the elections. The haredi audience (together with the Arab audience) is the main consumer of supervised food products, which are a significant portion of its shopping basket.
Netanyahu gave in to Shas and even put the demand for zero VAT on supervised food products in writing as an ultimatum for Yair Lapid
to stay on as finance minister. Lapid, however, was unable to respond to the demand because Netanyahu "forgot" to mention the issue of zero VAT on food products in their decisive meeting. It was so important to him that it completely slipped his mind.
There are those who are drawing similarities between the former finance minister's proposal for zero VAT on new apartments and the prime minister's proposal for zero VAT on supervised food product. This comparison is uncalled for and unfair: Lapid raised his proposal when the Knesset elections where nowhere in the horizon, as part of a comprehensive perennial plan for reducing housing prices.
Netanyahu, on the other hand, pulled his remarkable proposal out of his propaganda sleeve, without any consolidated economic plan, on the week it was decided to move up the elections.
There is therefore no need to seriously consider the economic and social aspects of the proposal, which is entirely open and blatant election propaganda. Even people (like me) who are in favor of setting two or three different VAT rates in accordance with a product or service's appeal to different social groups, will oppose the idea of eliminating the VAT on a small number of supervised food products.
Why a food product which is already under supervision is relatively cheap as it is and is manufactured at a minimum profit, and should therefore not the first candidate for VAT exemption, while life-saving medications and baby food, for example, should be the first in line for this benefit.
But these products have been omitted from Netanyahu's list. His "zero VAT" is simply an election temptation for naïve people.