3 Things That Cost a Lot of Money in Israel

People who pursue Hebrew language learning for immersion are often surprised by their first visit to Israel. If you’re learning Hebrew online with an intention to visit Israel, check out our list of things that are quite expensive here:

1. Housing

Housing in Israel is prohibitively expensive, particularly for people who move here only with some savings and a job lined up. There’s a lot of demand, and not enough supply, in the housing market.

Wealthy buyers benefit from low-interest rates and easily accessible credit, despite the continuous rise in property prices.

2. Cars

Buying a car for yourself is a major expense no matter where you live in the world, but buying a car in Israel is an especially costly affair due to the high tax percentages.

When importing a car, a person who is Israeli by birth—called sabra—is liable to pay as much as 92% of its value as a car tax. Immigrants—known as olim—pay about 50%.

This car tax is in addition to the Value Added Tax (VAT), which is calculated as 17% of the total amount of car value and car tax.

3. Gasoline

Fueling up your very expensive car in Israel is a significant expense in itself.

Gasoline in the country is subject to direct fuel tax—also called excise tax—and VAT. In 2020, the total fuel tax amounted to US$1.35 per liter, which at the time was equal to 78% of the total pump price.

This was also the highest tax rate for gasoline in the world.

Recommended Reading: Things You Will Struggle to Find in Israel

Why are Things So Expensive in Israel?

There are several factors that are responsible for things being expensive in Israel, which include:

1. Reliance on Imports

The country relies heavily on imports in many sectors. Understandably, importers not only wish to earn back what they’ve spent, but make a profit on it too. The high amounts of taxes and duties imposed by the government further raise the prices.

2. Highly Centralized Markets

The majority of Israel’s markets, while ostensibly free, are actually quite centralized and heavily regulated. Compliance with the relevant regulations increases the expenses, many of which are ultimately shifted to the consumer.

3. Monopolies and Oligopolies

There’s also a lack of competition in many sectors of the Israeli economy, paving the way for monopolies and oligopolies. This allows a small number of organizations to set prices and create terms, resulting in Israelis paying higher prices for the same items that are cheaper elsewhere.

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