Bloomberg News

Bronfman Says Israel’s High Food Prices Due to Government Taxes

November 29, 2011

Nov. 29 (Bloomberg) -- Matthew Bronfman, the chairman of Israel Discount Bank Ltd., said high food prices that sparked demonstrations in Israel this year are due to a steep value- added tax and protestors are wrong to blame retailers.

A government panel that explored how to address the concentration of financial power among 20 families in Israel following mass protests over rising prices recommended eliminating major cross holdings by groups and strengthening antitrust rules in a September report. The demonstrations and boycotts, which started in June as the price of cottage cheese increased, prodded Tnuva Food Industries Agricultural Co-Op In Israel Ltd. and Strauss Group Ltd. to offer discounts.

“The food-prices protests in Israel have to do with the fact that there’s a 16 percent VAT on food prices,” Bronfman said in an interview in New York today. “The imbalances don’t come from our side. It’s the government.”

Israeli billionaire Nochi Dankner’s Discount Investment Corp. ended talks on Nov. 21 to sell Shufersal Ltd., Israel’s largest supermarket chain, to Bronfman’s Isralom Properties Ltd. and England’s Noe family after no solution was found to satisfy a government committee that could force Bronfman and perhaps his partner to sell their holdings in Israel Discount Bank if they went through with the purchase.

Discount Investment said Oct. 16 it would sell its 46 percent Shufersal stake for 2.42 billion shekels ($638 million).

Isralom, which owns 18.56 percent of Shufersal, according to data compiled by Bloomberg, is controlled by the Bronfman family, which also has a stake in Discount Bank, Israel’s third- largest lender.

Tent Protests

Tent camps spread in Israel during the summer as part of the social protests asking for lower prices for food and housing. More than 250,000 people filled the streets outside the Defense Ministry on Aug. 6 at the “Rally for Social Justice” after housing prices increased about 40 percent in the past three years.

“It’s true that it’s very hard for young people to buy an apartment,” Bronfman said. “It’s a problem that has to do with supply and demand in the real estate in Israel. Still people should spend less time in tents and more time working.”

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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