February 27, 2014

Israel to reduce tax on imported dairy products

Israel, in the coming days, will reduce by 80% the tax on imported dairy products, including milk, butter, cream, and yogurt, Israeli Radio reported.

The Economy Ministry's move will cut the price of many dairy products nearly by half, as they are currently taxed at 100%.

In October 2012, the price of dairy products jumped, when Tnuva, Israel's largest manufacturer of dairy foodstuffs, announced a 2-3.5% rise in consumer prices following a 9% increase in the cost of unpasteurised milk, the main basic ingredient of dairy products.

In order to formulate an alternative plan following failure of negotiations, the Finance Ministry warned the Israeli Dairy Board in September 2012 that it would open the market to competition by permitting the import of dairy products to Israel.

The plan included a substantial reduction in customs rates, and an increase in import quotas, including those for milk powder.