Import duties on baby products and eyeglasses were canceled Wednesday, the first step in an ambitious program by Finance Minister Moshe Kahlon for a sweeping cancellation of all import duties and purchase taxes on all imported consumer products. The move is a temporary order issued by Kahlon on his authority as minister, and will remain in effect until the end of 2018, when it must be renewed.
Included in the order are baby products such as carriers, baby seats, cribs, swings, walkers, pacifiers, bottles, and other non-disposable items. Also canceled were duties on eyeglass frames and lenses. Many Israeli opticians, like opticians in many countries, ship prescriptions to China, where eyeglasses are made and shipped back from. Duties on sunglasses had been canceled in the past.
A report in Yisrael Hayom said that Kahlon was planning to cancel all import duties and purchase taxes on all imported consumer products. The report quoted Kahlon as saying that the removal of the taxes will even the playing field for Israeli retailers who have in recent years lost business to on-line retailers.
“The market is wide open today, whether we like it or not,” the newspaper quoted Kahlon as saying. “Anyone can order anything from anywhere at any time, and no one can stop this. But it gives us an opportunity to lower the cost of living,” he said.
Imported products sold in Israel generally have three tax components — import duty, purchase tax, and Value Added (sales) Tax (VAT). Import duty ranges from 0 percent on products made in countries with which Israel has trade agreements, to as much as 50 percent on large appliances from other countries. Most products imported into Israel are manufactured in China, a country with which Israel does not have a free trade agreement. For example, many toys, furniture items, shoes, and glasses frames and lenses imported from China carry a duty of 12 percent, while larger electronics can carry a duty of up to 30 percent. Kahlon’s plan would cancel duties on all consumer items across the board.
Kahlon also plans to cancel the purchase tax imposed on nearly all imported products. This tax ranges from 10 percent to over 100 percent of the value of a product. “Purchase tax was imposed originally to encourage Israelis to purchase locally produced goods, but most consumer goods are not produced here,” the report quoted senior Finance Ministry officials as saying. “Thus there is no reason for the purchase tax today.” The report said that Kahlon has worked out arrangements with the heads of Israeli companies that do compete with imports, to provide them with assistance to compete fairly with imports.
The cancellation of duties on baby products and eyeglasses will cost the state NIS 48 million. “This move is one of several we have already taken in the past to ease the burden on parents and children, among them the savings plan we instituted for children, the subsidies for day care centers, adding tax credits for working parents of children, and more,” Kahlon said. “Our assistance to young families starts with big things like the Price Resident program to lower the cost of homes for first-time homebuyers, and moves onto little things like pacifiers. We intend to continue to cancel duties and taxes, to open the market to competition, and to lower the cost of living for young families.”