In a discussion between the finance committee of Knesset, the legislative branch of the Israeli government, and participants from the ministry of tourism, the hotels association, tour organizers, and airlines, the chairman of the ministry of tourism said that Israel is already ranked well below its neighbors in the Travel & Tourism Competitiveness Index from the World Economic Forum. If the treasury’s proposals are verified, Israel will not succeed in realizing her tourism potential.
In a meeting held at the Knesset, representatives of the tourism industry attempted to explain to members of the Knesset the severity of the situation, should the vote in favor of imposing VAT on incoming tourist services be approved within the framework of the Law of Arrangements. According to the director general of the ministry of tourism, based on the optimistic evaluation of the Bank of Israel, cancellation of the VAT exemption will lead to a fall of only 170,000 foreign tourists, against this the ministry of tourism estimates a reduction of 290,000 incoming tourists.
He added that, “A reduction like this will lead to the dismissal of thousands of workers, which will not only be felt in the tourism industry, but also in all branches that supply services to the tourism industry, such as food, equipment, textiles, and others.” Noaz Bar Nir stressed that the damage would be fatal to the image of Israel as a leading tourist destination in the region.
“A tourist who decides not to visit Israel today because of the increasing cost of the tourist package will end up visiting a rival destination. Not only will he give up on us now, but also for years to come, not only for himself, but for his family and friends,” he continued.
Roby Herskowicz, country manager of Brussels Airlines in Israel, representing the foreign airlines in Israel, said that there was no argument that hotel accommodation, tour guide rental, and car rental to foreign tourists, are part of the export sector, providing value when paid for in foreign currency.
According to him, it would be unimaginable to impose VAT on the export of oranges, diamonds, and on the unmanned aircraft, so there is no foundation in imposing it on those tourists who still prefer to visit Israel.
At the completion of the discussion, representatives of the industry indicated that some members of the Knesset expressed their objection to the steps of the treasury, among them Shelly Yacimovich from the Labor Party, Miri Regev from Likud, and Shlomo Molla from Kadima, among others.