The Israeli business sector, the fashion industry in particular, is eagerly awaiting the election and a chance to replace its No. 1 nemesis, Finance Minister Moshe Kahlon. It has been a year since the Israeli Chamber of Commerce, organizations representing independent businesses and the Association of Labor and Industry in Israel filed suit against the minister in the Supreme Court against the VAT exemption for online purchases from abroad. In November, the court declined to intervene in the minister’s economic policies.

At the heart of their dispute is an exemption for individual consumers from paying VAT (and customs duties) on purchases worth up to $75 from international websites. The value-added tax in Israel, the same for virtually all products, is 17%, among the highest in the world. However, Israelis who make purchases from international websites are not required to pay it if the sum of the purchase does not exceed $75. All purchases up to $500 are exempted from custom duties.

“While I pay VAT the moment my goods arrive in Israel, spend a fortune on rent and logistics and create employment for 400 Israeli families, manufacturers overseas, who do not pay taxes here and do not employ a single person, enjoy a better starting point — 17% cheaper, in fact, as compared to local industry,” Dedy Schwartzberg, founder and CEO of the Adika online fashion store, told Al-Monitor. “The finance minister prefers to compensate European companies like ASOS and Next, which grow at crazy rates here. He sends a fortune out of the country and causes local chains to collapse, all for populist reasons.”

Schwartzberg was talking about the fall over the last year and a half of a long list of major Israeli companies, particularly in the fashion industry. It began with the Israel franchise of the men’s fashion brand Celio, which was swamped in debt and forced to sell its holdings, and continued with Honigman, which also had a controlling interest in the TNT clothing stores. Then followed the Zebra stores, the children’s fashion label Mish-Mish, the Ramilee line of maternity clothing, Wertheimer Sports fashions and the Sketch and Mausner fashion lines. On March 14, the clothing store Matim Li joined this dubious club. Each of them employed hundreds of people and had dozens of brick-and-mortar stores. According to figures released by economic analysts Dun and Bradstreet, 701 Israeli businesses dealing in fashion shut their doors in 2018, up from 396 in 2017.