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Treasury seeks alternatives to increasing taxes
By NIV ELIS
07/02/2013
Shas leader Yishai objects to Treasury offer to cancel VAT exemption from fruits and vegetables as way to cut in budget.
 
The Finance Ministry is seeking solutions to avoid raising general taxes over the next two years, Treasury director-general Doron Cohen said on Thursday.

“Taking money from everyone and imposing horizontal cuts on everyone is not the right thing to do,” he said in an interview with Army Radio. “There are tax exemptions in sums of NIS 15 billion to NIS 20b. There’s no need to cancel them all, but we should eliminate distortions in the economy.”

Cohen drew the wrath of Interior Minister Eli Yishai of Shas for suggesting that one policy that could hit the chopping block to help increase revenue was the value-added tax exemption on fruits and vegetables.

“Bringing back the idea of canceling VAT exemption from fruits and vegetables is another attempt to sacrifice the weak sector to budget cuts,” he said, promising to oppose such measures in the Knesset.

“I suggest the Treasury find creative and fair solutions for budget cuts, and not try to recycle failed, tasteless ideas from the past that will harm the weak sectors and middle class.”

Also on Thursday, the Finance Ministry announced that in the first month of 2013, the state posted a budget surplus of NIS 2.6b.

While a surplus is good news in comparison to the overall NIS 39b. budget deficit in 2012, which caused a political upheaval in the runup to the general elections on January 22, the news is not as good as it may first sound.

Differences in seasonal government spending mean that the budget in January is not representative of the year. Despite the overall deficit in 2012, for example, in January of that year the government posted a NIS 6.1b. surplus, more than double the current windfall. In comparison to last January, expenditures rose from NIS 17.5b. to NIS 19b., while revenues fell from NIS 23.6b. to NIS 21.6b.

On the bright side, the tax revenues collected exceeded expectations by about NIS 1b.

Until the government passes a budget for 2013, it is operating on a “1/12 framework,: in which it disperses government offices monthly funds equivalent to 1/12 of the previous year’s budget.
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