Shomer Shekalim

Home » Other Topics » other Israeli topics » How to pay LESS for your purchases DESPITE the recent increase in VAT

How to pay LESS for your purchases DESPITE the recent increase in VAT

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 174 other subscribers

legal warning

legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

In order to understand what I am about to explain, I need to bust one myth.  The price of an item has little to do with the cost.  The price of an item reflects the image and, most importantly, how much the consumer will pay.  Cost is only used to determine IF the item should be sold, based on the price it can be sold for and its profitability.

So how can you spend less?  Go to a neighborhood where people don’t spend as much money.  Prices for most items are cheaper in poorer neighborhoods Because (1) these people don’t have the money to spend and (2) the corporations are trying to get as much money as they can from each demographic, corporations have to charge less in these areas in order to get a sizeable profit.

This is not limited to food items.  Electronics (space heaters, extension cords, converters), toys, clothes, and furniture are incredibly cheaper in poorer neighborhoods.  And there is usually little to no quality difference; most items are even from the exact same brands.

Back when I was in Yeshiva in Har Nof, I went to Mea She’arim to buy a heater, because I found that in Har Nof (a middle last area) the heater cost ₪ 100, while in Mea She’arim (a poorer area) it was only ₪ 30.

But won’t you have to pay more anyways because of the increase in VAT?  Not necessarily.  An increase in taxes does not always fall on you, even if the government says it will.  When a tax is levied, the greater burden of the tax will fall on the more inflexible of the buyer and seller.  The explanation is pretty long and involves too much math, but to summarize, if you can go to a cheaper supermarket, the original seller will have to decrease his price, thus absorbing more of the tax.  So by shopping in the poorer neighborhood, you are not only saving yourself money, but causing your local seller to decrease prices, and begin to unburden yourself of the VAT tax.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: