New year kicks off with price rises

New year kicks off with price rises

Water and income tax go up, with the cost of electricity expected to follow after elections; Livni says Netanyahu is 'spitting in the face of the public'

Stuart Winer is a breaking news editor at The Times of Israel.

A balcony in Jerusalem, March 2012 (photo credit: Uri Lenz/Flash90)
A balcony in Jerusalem, March 2012 (photo credit: Uri Lenz/Flash90)

The new year kicked off with a range of cost-of-living hikes coming into effect, and these are expected to be followed by more during the course of 2013.

Starting Tuesday, the price of water increased by 3 percent for the first 3.5 cubic meters per person in the household, bringing it to NIS 9.09 ($2.43). Beyond the allocated 3.5 cubic meters, water will now cost NIS 14.60 per cubic meter. The price increases adds up to a total 36% increase since 2010.

The rise in water prices was caused by an increase in the cost of electricity and a government commitment to buy 100 million cubic meters of desalinated water, Maariv reported.

Aside from the water squeeze, annual property taxes also went up by 2.3%. Car prices are also expected to rise.

A 1% income tax hike for those earning NIS 14,000-NIS 41,000 ($3,750-$10,980) per month also went into effect. Those earning NIS 800,000 (about $200,000) or more a year face a 2% income tax rise.

Knesset Finance Committee Chairperson MK Carmel Shama-Hacohen (Likud) said in an interview with Army Radio that it is better to be direct about price hikes than disappoint people with false promises.

“No one like to put prices up, and especially on the eve of elections,” Shama-Hacohen said. “But you can’t sell the public illusions that afterwards come crashing down. Those who are paying the highest price are the weaker sectors. The reality isn’t simple; there is a hole that needs to be filled and no one takes great pleasure in that.”

Hatnua party head Tzipi Livni accused Prime Minister Benjamin Netanyahu of playing political games with the working classes and pandering to the ultra-Orthodox.

“The Netanyahu government is decimating the middle classes and spitting in the face of the public,” Livni said. “For four years now the government has taken care of those who aren’t contributing to society or the economy, out of political interest. In the Israel of 2013 if you aren’t a natural [coalition] partner for Netanyahu, then you just don’t count.”

The bad news for your pocket is expected to worsen after the January 22 elections. Once a new government has been voted in, a range of price jumps are expected to be decreed on electricity, milk, fish, poultry, public transport, cigarettes, and alcohol.

Electricity prices have been driven up by raised fuel prices for generators and interrupted supplies on natural gas from Egypt.

Following the Egyptian revolution in 2011 militants blew up the natural gas line that runs from the Sinai into Israel.

A dispute over payments and continued sabotage attacks by militants eventually led to the halting of natural gas supplies from Egypt in 2011. Although the Israeli operated Tamar natural gas offshore rig is expected to come on-line in April, it is not expected to bring down electric prices.

The rise in electricity costs will also likely push up the cost of locally manufactured products.

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