MK Moshe Gafni (UTJ) 311.
(photo credit: Marc Israel Sellem)
The government’s NIS 14.15 billion austerity package will be the subject of a
special Knesset session Monday afternoon, after the Ministerial Committee on
Legislation approved the package Sunday.
Should it pass the Knesset,
Value Added Tax (VAT) will rise by one percentage point to 17% on September
Above-average income will be taxed an extra 1% and all income above
NIS 67,000 per month will be charged a 2% surtax from January 1, while the green
tax, purchase tax on investment apartments and employer contributions to the
National Insurance Institute will all be updated.
Labor Chairwoman Shelly
Yacimovich slammed the ministerial committee for supporting an emergency order
waiving the income-tax debts of a number of large multinational corporations
such as Intel and Teva Pharmaceuticals.
The order would change the tax
rates on an estimated NIS 120b. in “trapped profits” accrued by the
multinationals as part of the Encouragement of Capital Investments Law. The law
currently exempts the corporations from certain taxes, as long as they invest
their profits in further activities in Israel.
“Instead of conducting a
proper income tax evaluation in accordance with the law and collecting debts to
the good of state revenues,” Yacimovich said, “Prime Minister Binyamin Netanyahu
appears as the Santa Claus of the rich, and introduces a special law to wipe
those debts. This is so particularly irritating given the heavy tax burden
imposed on the poor and the middle class along with the claim that ‘there is no
such thing as a free lunch’.”
Also Sunday, the Knesset Finance Committee
rejected a proposal by Committee Chairman Moshe Gafni to increase the corporate
tax rate from 25% to 25.5%. Calling Israeli taxation policy “dreadful,” Gafni
said that raising the tax by 0.5% would bring the country into line with other
OECD member countries and increase state revenues by an extra NIS 400
Treasury Director-General Doron Cohen pointed out that the
Finance Committee approved raising the corporate tax on profits from 24% to 25%
last year, and said most companies were already struggling enough without
imposing an even heavier burden on them.
Cohen summarized the government
package for the committee, rejecting accusations that they are Draconian and labeling the income tax hike “only a marginal increase.”
Those who earn
NIS 15,000 per month will pay only NIS 20-30 more in direct taxation, those who
earn over NIS 20,000 will pay around NIS 100 extra each month, and those who
earn NIS 40,000 per month will pay around NIS 300 more, he said.