Netanyahu’s Economic Promises Fall Short Amid Rising Costs and Unfulfilled Reforms

Prime Minister Benjamin Netanyahu, once regarded as a skilled finance minister over two decades ago, has seen many of his recent economic promises remain unfulfilled. Despite his extensive experience, sources say Netanyahu has recently shown little interest in initiating economic reforms, with many pledges made especially at the start of his current four-year term left unimplemented. The outbreak of war on October 7 shifted government resources toward security, further sidelining economic initiatives.

The government’s main promise to combat the high cost of living has not materialized; prices in key sectors rose between 15% and 30% over the past four years. Netanyahu established a ministerial committee to fight the cost of living, chaired by Finance Minister Bezalel Smotrich, but it met only once. Promises to freeze property taxes were broken as these taxes increased, and efforts to reduce electricity and water prices remained unrealized. Netanyahu’s publicized visit to a gas station pledging lower fuel prices did not lead to any price drops.

Other commitments, such as temporarily raising VAT to 18% with plans to reduce it later, were not fulfilled, nor was the gradual VAT cut from 17% to 12% over five years. Corporate tax reductions aimed at boosting investment never occurred. Promises to provide free early childhood education for ages 0-3 were largely unmet, with some benefits withdrawn from the ultra-Orthodox community. Efforts to lower fruit and vegetable prices through market liberalization failed, resulting in continued price hikes.

Housing initiatives, including expanding supply and financial tools to ease market pressure, remained on paper. Rent prices soared, and pledges to build thousands of rental units were not realized. Subsidies for mortgage holders, proposed by Netanyahu’s economic advisor Professor Avi Simhon but opposed by the Bank of Israel, were never implemented, disappointing many borrowers.

Tax incentives and financial aid promised to northern Israeli communities have largely not been delivered, with local leaders criticizing the government for empty promises. Despite repeated assurances since October 2023 to cut coalition budgets unrelated to the war, these budgets have instead increased by billions of shekels. Industrialists also received unfulfilled promises, including a government decision to promote local product procurement and strengthen Israeli industry, which has stalled due to Treasury opposition.

Netanyahu’s 2022 pre-election pledge to reduce living costs through deregulation and lower business expenses has not been realized. Instead, property taxes for industry have risen, water and fuel costs increased, and bureaucracy and regulation have worsened. Critics highlight that many of Netanyahu’s economic promises over the past four years have failed to materialize. The Prime Minister’s office declined to comment on these issues.