Israel’s Finance Ministry on Wednesday unveiled a major change to personal import rules, announcing that Finance Minister Bezalel Smotrich will double the VAT exemption on imported consumer goods—from $75 to $150—in a bid to tackle the country’s skyrocketing cost of living and break the grip of powerful domestic monopolies.

The plan would dramatically expand tax-free shopping for Israelis who buy from international retailers, a move the government says will inject much-needed competition into a heavily concentrated market dominated by a handful of large companies that, officials argue, routinely charge Israelis far more than consumers in other developed countries.

“The Israeli consumer pays more than their counterparts in Western countries,” Smotrich said, accusing “monopolies and tycoons” of exploiting Israel’s insulated market. “I have decided to increase competition in this sector and thereby reduce the cost of living for households in Israel.”

The ministry did not name specific companies but said market concentration has created “a high and unjustified price level for all households,” leaving Israeli consumers with weaker purchasing power than residents of most European nations. Israel ranks 22nd out of 38 in purchasing power among OECD countries, the ministry noted.

According to OECD data cited by the government, Israel is the fourth-most expensive developed country, and its food and beverage prices are 52% higher than the average among developed nations—second only to South Korea.

Alongside its announcement, the ministry released a copy of Smotrich’s order for public comment before the measure is formally signed. The reform, once enacted, would apply to millions of online purchases made annually by Israelis seeking cheaper goods abroad.

The announcement comes as government officials face growing public anger over Israel’s rising cost of living, from supermarket staples to household goods. Boosting tax-free imports shifts pressure onto domestic suppliers to lower prices or lose market share to international competitors.

Smotrich framed the policy as a direct blow to entrenched economic interests:

“Entire sectors are held by monopolies,” he said. “They exploit the closed economy to charge the Israeli consumer a high and unjustified price.”

The expansion of the VAT exemption—if approved—would immediately widen access to cheaper goods from abroad and test whether foreign competition can finally break Israel’s long-standing price problem.

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