Prime Minister Netanyahu and Finance Minister Smotritz announced the economic plan to combat the cost of living in Israel.
According to their announcement, the plan includes 4 measures which they claim cause inflation and affect the increase in prices and the cost of living: fuel, water and electricity:
- Freezing the property tax rate for one year – the Minister of the Interior will sign an order to cancel the 1.4% increase in the property tax and the government will take care of compensating the authorities in the balance budgets
- Canceling the increase in fuel prices
- Reducing the price of electricity by 70% and compensation for needy families
- Reducing the price of water by 70%
In addition, the government will provide a grant of NIS 200 for the heating grant to approximately 300,000 families who are entitled to it.
In addition, the Minister of Finance spoke about increasing the National Insurance benefits:
Some disability will cost 375 NIS
An allowance for a disabled child will cost 310 NIS
Supplementing income for a senior citizen will cost NIS 213
The old age pension will increase by NIS 152
According to them, there will also be an increase in the net income of the employees by updating the tax rates, lowering social security fees and health tax:
For example, a family of two working parents with 2 children will have an additional NIS 435
A couple without children with an average salary will have an extra NIS 280
An individual will have an additional NIS 137
Regarding the housing crisis, Smotritz said a plan will be presented for the state budget and the goal is to preserve the supply of apartments which will remain around the construction of 75-80 thousand apartments per year. There will also be assistance programs for the populations.
Below is the complete plan to address the rising prices in the economy
Reducing the increase in electricity prices:
The excise tax on coal will be reduced and accordingly the Electricity Authority will be able to reduce the electricity tariff increase by approximately NIS 60 per year per household (a reduction of approximately 15% of the price increase).
In the coming weeks, more steps will be presented to the government to further reduce the tariff. The total steps are expected to result in a reduction of approximately NIS 240 per household and, together with the assistance tools for the weaker populations, to reduce the total increase in the price of electricity to an average of approximately 70% per household. For small and medium-sized businesses, the planned measures will result in the complete cancellation of the increase in the electricity rate.
Reducing the increase in water prices:
The increase in the water rate will be reduced at a rate similar to the reduction in the electricity rate. As a result of the move, households will save an increase of tens of shekels per year. The move was made thanks to the reduction of the electricity tariff as well as thanks to the waiver of a dividend from the Mekorot company, so that the amounts will instead be used to reduce the water tariff.
Help to deal with the cost of living for vulnerable populations:
The heating grant will be partially advanced so that those entitled to the grant will receive a payment of approximately NIS 200 now, instead of in October, in order to help them deal with the cost of living at this time of the year.
The heating grant is a grant in the amount of 608 shekels paid every October by the National Insurance Institute to about 300,000 seniors who are entitled to supplemental income or to seniors who are entitled to a disability allowance.
Freezing the increase in fuel prices:
The excise tax on fuel will be reduced by 10 AZ until the end of 2023. The measure will make it possible to cancel the increase in the price of fuel (gasoline) that took effect on January 1, 2023 in the amount of 9 AZ and will help reduce the price later this year.
Freezing the increase in property tax rates:
The increase in residential property tax rates of 1.37%, which went into effect in January 2023, will be frozen. The step is expected to save about NIS 70 per year on average per household.
Alongside these measures, in January automatic compensation mechanisms went into effect that increase the disposable income of households
Increase in National Insurance benefits:
The National Insurance benefits increased in January 2023 according to the index updates. Most allowances were updated at a rate of 5.3%, according to the Consumer Price Index update, and disability allowances were updated at a rate of 9.8%.
The reduction of the provisions for social security contributions and health tax:
The collection scales of the National Insurance and the health tax were updated in January 2023 at a rate of 12.5% in accordance with the rate of average salary increase.
All employees whose monthly salary is higher than NIS 6,331 will benefit from a reduction in the rate of provision for social security contributions and health tax of up to NIS 67 per month.
Tax reduction:
The income tax rates were updated in January 2023 in accordance with the update in the Consumer Price Index. In addition, the value of credit points was updated, and the value of the point increased from NIS 223 to NIS 235.