BREAKING NEWS

Finance Committee approves raising VAT to 17% in September

By NADAV SHEMER, GIL STERN STERN HOFFMAN

AUGUST 2, 2012 01:13

Value Added Tax will increase to 17 percent from 16% at the beginning of September, after the Knesset Finance Committee approved the measure by 11 votes to six Wednesday.

The government introduced the VAT increase earlier this week as part of a series of sweeping austerity measures it hopes will raise NIS 14.5 billion next year and help achieve the new budget deficit target of 3%. The package includes a 1% income tax hike for above-average earners, 2% surtax for income over NIS 67,000 per month, and legislative amendments to allow for more tax collections from large corporations.

Finance Committee Chairman Moshe Gafni (UTJ) said at Wednesday’s meeting that more measures would need to be introduced, but warned the government against making decisions without consulting his committee. The previous day, Finance Minister Yuval Steinitz agreed to Gafni’s request to postpone the VAT hike from August 1 to September 1.

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