January 27, 2023

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New Year Brings Price Hikes in Gasoline, Electricity, Property and Water Tax

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A range of essential products and services saw their prices go up at midnight, which means that consumers were saddled with big increases in the cost of water, electricity, gasoline and other items.

These hikes come only a couple of days after a new government was sworn in with Prime Minister Benjamin Netanyahu leading.

The coalition agreements that he has made with the Haredi and far-right parties include bringing down the cost of living.

The hikes

There was an 8.3% increase in electricity, which makes it the third hike in 12 months. This means that electricity will now cost 20% more than it did a year earlier.

According to the electricity company, the global energy costs are responsible for the rise, as fuel supplies have been significantly impacted due to Russia’s invasion of Ukraine.

Gas prices also increased at midnight by NIS 0.9, which means they have now reached NIS 6.94 per liter. This increase was because a tax break of the Finance Ministry expired, which had reduced the cost of gasoline last year.

There will also be a 3.5% in the prices of water, which is because of an increase in electricity and in the consumer price index (CPI).

The reasons

Meir Spiegler, the CEO of the Israel Electric Corporation, said on Sunday that the increased costs of fuel needed for generating electricity has resulted in the rise in prices.

He said that when the cost of the raw material i.e. coal goes up, they cannot ignore it. Spiegler added that the increase was a lot more moderate than what they had been seeking.

The chief executive said that the ISE had been interested in an increase of 15% in the price of electricity, but a lower figure had been negotiated by the previous government.

Reports showed that NIS 80 will be added to an average household’s bimonthly bill due to the price rise. However, they did not disclose how the calculation had been done.

Spiegler said that electricity disconnection would only occur as a last resort.

The concerns

Meanwhile, there are also concerns that the rise in electricity prices would see a knock-on effect, as leisure sites and restaurants would also increase their prices to recover their expenditures.

Media reports said that officials of the Finance Ministry were looking for ways to reduce the hike in electricity prices.

It is possible that the rise could be frozen by the Treasury for a month or two, until they can come up with a solution.

The gasoline tax break could have been extended by Bezalel Smotrich, the newly appointed Finance Minister, but this would lead to additional costs of NIS 200 million.

The treasury officials believe that finding the necessary funding would be difficult. The higher price of water is also expected to impact prices of fruits and vegetables and other agricultural products.

Likewise, restaurants and hotels may also hike their prices to offset higher water bills. There will also be a 1.37% increase in the municipal property taxes and businesses are expected to pass it onto the consumer.

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