Yuval Steinitz 88 248.
(photo credit: Ariel Jerozolimski)
The Knesset Finance Committee on Sunday unanimously approved an amended version of a bill to recognize child care as a tax deductible expense for working mothers.
The improved bill, which would cost the country over NIS 600 million, is now pending second and third Knesset readings.
In April, the High Court of Justice had ruled that child care costs should be recognized as a tax-deducible work-related expense, and rejected the state's appeal to a district court on the issue. However, in mid-June, 19 cabinet members voted in favor of a bill proposed by Finance Minister Yuval Steinitz, according to which the state would give working mothers one point of tax credit for every child below the age of five, but would not recognize child care expenses as tax deductible.
The amended bill includes a grant in accordance with Negative Income Tax Law for mothers earning less than the taxable income threshold in 2009, costing NIS 75 million over the next two years.
Mothers earning more than the taxable income threshold will receive tax credits for every child aged 0-5, starting in 2012, instead of the Treasury's initial proposal of 2015. The yearly cost of this clause of the new bill is NIS 290 million - with one credit being worth NIS 200 - the equivalent to a tax deductible expense of NIS 1,300.
The main changes in the bill approved Sunday are the increased subsidies for day care centers, pre-nursery play groups and afternoon child care facilities, which will amount to NIS 320 million from September 2010.
In addition, NIS 20 million will be allocated toward building new day care centers.
The amendments were agreed upon in a meeting between MK Tzipi Hotovely (Likud), who is chairwoman of the Knesset Committee for the Advancement of the Status of Women, and the Treasury, which doubled the amount it had initially offered for working mothers.
The Treasury stressed Sunday that most working mothers and children aged 0-5 would benefit from the amended bill.