As the Israeli Minister of Finance Yair Lapid continues to slash away without compunction at the country’s budget amidst increased controversy and protests, it now appears that he and other government leaders are taking a proverbial axe to the lucrative tourism industry and signaling its death knell.
For those not in the know, Israel charges a value added tax to all purchases made by its residents, but until this juncture tourists were mercifully exempt from paying the VAT.
While we acknowledge that balancing a budget for an entire country is no day at the beach, there is little question in our mind that MK Lapid is in an unenviable position. As he implements dramatic austerity measures against out of control spending, we have learned that on June 1, the Knesset will be implementing an increase in the VAT from 17 percent to 18 percent and now tourists will be obligated to cough it up.
Ask any tourist who considers a trip to Israel; (especially those from the United States) and they will tell you that after paying the obscenely exorbitant costs of airfare to the Jewish state, the last thing they need is to be hit with taxes on such things as hotels, travel services and manufactured goods.
The tourism industry has proven to be a hefty boon to the sometimes fledging Israeli economy and something that Israel cannot afford to tamper with. Making Israel a place that is affordable for tourists the world over will only serve to make life a bit less arduous and stressful for the average Israeli and will entice those tourists who would have never even considered a trip there.
Having said that, the head of the Conference of Presidents of Major American Jewish Organizations have stepped up to the plate and have made their plea. Chairman Richard Stone and Executive Vice Chairman Malcolm Hoenlein have penned a letter to Prime Minister Benjamin Netanyahu, Minister of Finance Yair Lapid, and Minister of Tourism Uzi Landau, telling them in no uncertain terms that applying the VAT to tourists “would add significantly to the cost for tourists and will, we fear, cause many to reconsider, postpone, or even cancel trips to Israel.” In particular they were referring to the plethora of missions to Israel sponsored by innumerable organizations that take place each year and to the varied conferences that are held there as well.
They added that, ““We recognize the tremendous economic importance of tourism, but also its hasbara value and its central role in building ties between Jewish and non-Jewish communities around the world and Israel. During difficult times, it was these visits that showed the people of Israel that they were not alone and demonstrated to the world the support that Israel enjoys. While we recognize the budgetary need for additional funds and for all to contribute, it is our hope that other sources can be found that will not damage this vital sector of Israel’s economy and diminish its ties to the international community.”
Kudos and accolades to them for hitting the nail on the head and making a valiant attempt to shake some sense into the myopic minds of some Israeli leaders. At some point in ours lives, we have all heard of the old adage that reminds us to maintain a sense of financial pragmatism. It goes, “Penny wise, but pound foolish”. Clearly, this phrase enjoins us not to lost sight of the big picture; not to pat ourselves on the back for saving a paltry sum on foolish things, but maintaining a niggardly posture on paying for things that will reap even greater dividends. Such is the case here.
The hard core facts of reality dictate that Israel needs tourism dollars the way fish need water. This revenue is absolutely indispensible. Dissuading tourists from traveling to Israel by hitting them with taxes on just about everything is about as ludicrous as the one of the famous stories of the people of Chelm.
It is told that in Chelm there was once a huge hole in one of the roads that was heavily traveled by horse carts as well as pedestrian traffic. As people and carts would pass, they would inevitably take a bad fall in the hole and many serious injuries arose as a result. So, the solution that the great minds of Chlem came up with to solve this seemingly difficult dilemma? Rather than hiring someone to fix the hole in the road, they invested money to build a hospital at the bottom of the hole to deal with the influx of patients.
Don’t we see some parallels here? Rather than hiking the costs for tourists, Israel would do well to devise a concrete plan to save tourists some hard earned money so that they will be more than likely to visit Israel; not just once but many times over.