Prices on Cars and Imported Delicacies Soar; No Decline in Sales Forseen

Imported automobiles cost Israelis today as much as four times more than they would have paid yesterday as a result of new sales taxes posted by the Government this morning. The sales taxes, plus increased ownership and license plate fees and defense surcharges are expected to yield about half of the $35 million additional revenue that the Government says it must have this year. The balance will come from higher levies on local and imported beers, wines, foodstuffs, stoves, cameras, office machinery and a welter of other items.

A Chrysler Valiant, an American compact car, now costs $11,500 FOB. A European medium size car, such as the French Peugeot, a favorite of the Israel middle class, is priced at just under $7000. Licenses and other fees have gone up in the amount of $30 a year for small cars and $70 for medium-size vehicles. But Israeli Treasury sources said today that they didn’t think car sales would fall off. They based their opinion on the fact that there was no appreciable decline in car sales when taxes were raised the last time, less than a year ago.

There were no reports of an immediate slackening of business in shops that specialize in American cigarettes, and such imported delicacies as sausages, caviar, sardines and salmon which have doubled in price overnight because of higher tariffs. Locally made beers, wines and brandies of better than average quality have also gone up in price as a result of the new sales taxes. For the time being however, the prices of television sets, tape recorders and various electrical appliances remain the same following a heavy tax rise on them last year. The Government considers its new taxes essential for revenue purposes and to hold down inflation. It does not expect a consumer revolt. Government sources noted that automobiles and other hard goods affected by the new taxes account for less than one half of one percent of Israel’s cost of living index.