The reduction of the duty on the tuna saved consumers NIS 27 million
Does reducing tariffs on imports lead to a decrease in the cost of living?
At least in the case of the tuna, probably yes - this is according to the competition authority's draft research report.
The report also shows that the reduction of the duty on the import of canned tuna led to an average decrease of about NIS 2.7 per kg in the price to the consumer of all canned tuna
Sunday, October 02, 2022, 13:32 Updated: 18:03
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A popular product in many homes in Israel.
Contrary to some predictions, the tax reduction on imports has been rolled into the pockets of consumers (Photo: ShutterStock)
In recent weeks, the Israeli government canceled the tariffs on the import of fresh, frozen and processed fish.
The claim of the economic ministers who are involved in the initiatives and of the Prime Minister is that these are measures that increase competition and thus ease the cost of living.
Now it turns out that this may already have an expression on the ground.
The decree signed by the Minister of Finance includes the cancellation of the customs duty on a variety of fish such as sea bream, sea bass, locus, musser, sea bass, trout, tuna and seafood.
In relation to some products, the customs duty will be canceled immediately and in relation to others, it will be canceled gradually.
The decree also includes the cancellation of the customs duty on canned tuna.
As for tuna, this is not the first time that the duty on this product has been reduced.
Between the years 2013-2016, a tariff reduction was gradually applied to the import of canned canned tuna to Israel, with a total amount of NIS 3.5 per kilo.
During this period and also in the years that followed (between the end of 2013 and the end of 2017), there was a slow and continuous decrease in the price to the consumer of canned tuna in Israel, in a total amount of about NIS 3.3 per kilo.
Now, according to the competition authority's draft research report, it appears that the reduction in the duty on canned
tuna was fully passed on to consumers and saved the public about NIS 27 million per year.
C led to a decrease of about NIS 3.9 in the consumer price of imported canned tuna, and an average decrease of about NIS 2.7 per kg in the consumer price of all canned tuna (including those packaged in Israel).
Attorney Michal Cohen, head of the Competition Authority. The Authority's research draft states that, at least in the case of tuna, reducing protective tariffs on imported goods contributes to increasing competition (Photo: Competition Authority website)
The comic producers also lowered prices
Since the consumer price of canned tuna is affected by many factors, primarily the global price of raw tuna, the competition authority examined the contribution of the customs reduction to changes in the consumer price.
The investigation by the Authority's research division revealed that the reduction of the duty on the import of packaged tuna led to a decrease in the price for the consumer, and that it was followed by a decrease in the concentration of the industry, an increase in the amount imported, an increase in the variety of imported products, as well as the entry of new importers.
It was found that the average price to the consumer of the imported canned tuna decreased by NIS 3.9 following the reduction of the customs duty, a greater decrease than the reduction of the customs duty itself.
At the same time, it seems that the suppliers of the tuna products that are packaged in Israel, who in the period under review account for the lion's share of the total sales of canned tuna in the food marketing chains (between 85%-92%), responded to the customs reduction, even though they did not benefit from it.
Accordingly, the average price for the consumer of all canned tuna products decreased as a result of the customs reduction by approximately NIS 2.7.
The household cost-benefit test also indicates a significant benefit as a result of the customs reduction: the reduction of the customs duty led to an aggregate saving in household expenses of approximately NIS 38 million per year, against the loss of government revenue from customs estimated at up to approximately NIS 11 million.
In addition to the public benefit resulting from the decrease in the price for the consumer, it was found that at the same time as the reduction of the customs duty, the variety of products and brands marketed to the consumer in the food marketing chains increased, as well as the entry of new suppliers into the industry and a decrease in the concentration of the industry.
The Competition Authority, according to its announcement, views positively the policy of removing barriers to imports - both the tariffs and the other barriers, and calls for the continuation of this trend.
The Commissioner for Competition stated that the broad impact of the reduction in the tariff on the ton also on the competing products, which were not directly affected by the reduction, signals that the competitive potential inherent in the reduction of tariffs may spread even beyond the predicted direct effects.
The commissioner also stated that this is another case where we clearly see how the easing of import barriers creates a competitive improvement and rolls into the consumers' pockets.
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