2023 welcomes Israel with a wave of price increases for products and various services


by Ifi Reporter Category:Financial Jan 1, 2023

Today, January 1st, every Israeli citizen will feel a wave of price increases for products and services that has not been seen in years, such as at the beginning of the civil year.
Today, the salaries of Knesset members and other senior officials are also expected to increase, at a high rate of up to 15%. The final rate will be determined at the beginning of the month, after the publication of the average wage in the economy in the relevant months. The Public Dress Committee recommended raising the salaries of Knesset members by only 2% and attaching all senior public sector officials to them, including the president and judges. The change in the linkage method requires the approval of the Knesset, and therefore the final rate of increase in the salaries of the office bearers is expected to be determined later this month.
  Among other things, electricity, water, fuel, property taxes and electric vehicles will become more expensive in the morning.

The offices of the Prime Minister and the Treasury will try to take action in the coming days to freeze or reduce some of the price increases, but senior Treasury officials emphasize that the price increases cannot be stopped for the time being and they will enter into force.
The large-scale price increases, whose effect on the family consumption basket is particularly high, will contribute, according to a preliminary calculation, to an increase in inflation of about half a percent, in addition to many additional price increases that are expected this month, including food and hygiene products, which companies have already announced will increase in price in January.
Another addition to the increase in inflation is expected as a result of the jump in the euro exchange rate in the last two weeks, which will also cause a significant increase in the price of some of the products imported to Israel from Europe.
On the eve of the elections and in the last few weeks, Prime Minister Benjamin Netanyahu promised that he would work to lower fuel prices, prevent the increase in electricity and water prices, and freeze property taxes, but tomorrow all of these will become more expensive and it is doubtful that the increases will be avoided in the coming days.
On the other hand, the Finance Committee of the Knesset is expected to cancel in the coming days the increase in taxes on disposable dishes and sugary drinks, decisions made by the outgoing government for the benefit of citizens' health and the benefit of the environment.
Electricity is becoming more expensive at a rate of 8.2%, after its price increased just four months ago by a high rate of 8.6%. The appeals of the Association of Manufacturers, the Union of Chambers of Commerce and other economic organizations to reduce the price increase were rejected by the Electricity Authority Plenary.
The price increase is due to the more than 200 percent increase in the price of coal in the world in the last two years, when 23% of the electricity in Israel is still produced using coal, at least until the end of 2025. The increase in price will affect a 0.2% increase in the consumer price index and bring about NIS 2.2 billion into the coffers of the Electric Company. Average family expenses on electricity will increase by about NIS 40 per month, which is NIS 80 in the bimonthly bill.
Water is becoming more expensive at a rate of 3.5%, mainly due to the increase in the price of electricity. This is partly due to the increase in spending on water desalination. This is an increase in spending per family by about NIS 16 in the bi-monthly account.
Fuel: A liter of self-service 95 octane fuel has become more expensive by 9 cents, even though oil in the world has been cheaper in recent weeks. This, after the tax discount on fuel has ended, and its price will be 6.94 shekels from January 1, an increase of nine shekels compared to December. The supplement charged for full service will be 21 agorat and the price will reach NIS 7.15 per liter. In Eilat, without value added tax, a liter of self-service 95 octane fuel will cost NIS 5.93, an increase of 7 cents.
The increase in price for those who fill a 50-liter fuel tank once a week will add about NIS 15 per month to the family's expenses, and for those who fill two tanks a week about NIS 30, which is an additional NIS 360 at an annual rate.
Property taxes will become more expensive by about 1.4%, but there will be settlements where the taxes will also increase up to 3%. The price increase for offices will be higher than for apartments. In total, the public in Israel will spend about NIS 33 billion on property taxes this year. The price increase for those who pay NIS 800 for two months will be about NIS 70 a year. The increase in the municipal tax will contribute about 0.1% to inflation.
The tax on electric vehicles will increase by 10%, contrary to the global trend to encourage the use of electric vehicles while lowering taxes on them. As a result, an electric car will become more expensive by thousands of shekels, when the importers have already made it clear that they do not intend to absorb the tax increase and will pass it all on to the buyers.
In the area of discounts, in the coming days the Finance Committee of the Knesset is expected to cancel the increase in taxes on disposable utensils and sugary drinks, at a cost of NIS 1.1 billion, a reduction in the state's tax revenues. The imposed tax will increase the price of disposable tools for the consumer starting in November 2021 by about 70%. Also, the tax on sugary drinks at the rate of 1.3 shekels per liter of drink, 70 shekels for diet drinks and 7.8 shekels per liter of concentrate for making a drink will be abolished.



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