American Jewish leaders on Saturday urged the Israeli government to reconsider a clause in its budget proposal that would apply 18 percent value-added tax (VAT) to purchases made by foreign tourists, warning that the measure could have a negative impact on tourism to the country.
“The addition of the VAT would add significantly to the cost for tourists and will, we fear, cause many to reconsider, postpone, or even cancel trips to Israel,” read a letter sent to Prime Minister Benjamin Netanyahu by the Conference of Presidents of Major American Jewish Organizations. “In addition, it will negatively impact important programs like America’s Voices in Israel, Taglit-Birthright, missions, and conferences.”
After running up a deficit of NIS 39 billion ($11 billion) — 4.2 percent of Israel’s gross domestic product – in 2012, the government proposed a series of austerity measures, among them the annulment of a longstanding VAT exemption for foreign tourists.
Thousands of Israelis took to the streets to protest the budget proposal on Saturday night.
“Since tourism is linked to many sectors of Israel’s economy, we are concerned that making Israel an unaffordable destination for American and other foreign tourists would harm not only those who work directly in the tourism industry, but also those who are employed in supporting industries, suppliers, merchants and others,” read the letter, copies of which were also sent to Finance Minister Yair Lapid and Tourism Minister Uzi Landau.
According to Tourism Ministry figures, a record-breaking 3.5 million tourists visited Israel in 2012, some 610,000 of them American – more than any other country.