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Plan for Stiff Tax on Produce Sours Israeli Taste at the Shuk

Israelis broke the Yom Kippur fast without much in the way of fresh fruit and vegetables. Farmers, produce wholesalers and greengrocers refused to handle agricultural products, to protest the Treasury’s plans to impose a 16 percent value-added tax on such produce.

Extension of the VAT to agricultural products at the retail level is part of Finance Minister Yitzhak Moda’i’s economic program approved by the Cabinet on Sept. 14.

Stallkeepers and grocers have balked. They dismiss the Treasury’s assurances that the VAT will not come out of their pockets but will be paid by the consumer.

The dealers, mostly small merchants, say they are not equipped to handle the paperwork involved in collecting the VAT from their customers and claiming reimbursement for the VAT they pay their suppliers.

“How can we collect VAT from a woman buying three tomatoes, and how will the Treasury deal with fruit and vegetables on which we already paid the tax but was unsold by the end of the day and rotted?” one grocer asked.

A spokesman for the Farmers Federation told Israel Radio on Friday that a weeklong strike would be declared shortly. He said the marketing of poultry and fish would be halted, in addition to fresh produce, unless Moda’i backs off on the VAT.

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