Finance C'tee attacks car tax proposal

The Treasury views the current tax rates as too low and outdated, effectively offering tax breaks for the middle class.

By YONI TEITZ
June 27, 2007 08:46
1 minute read.

The Treasury's proposal to raise the tax value of company cars met with fierce criticism on Tuesday as Stas Meseznikov, chairman of the Knesset Finance Committee, said the plan was equivalent to levying extra taxes, and would hurt hundreds of thousands of citizens. Currently, employees who use company cars are taxed based on an estimated value of the car. The Treasury views the current tax rates as too low and outdated, effectively offering tax breaks for the middle class. On the other hand, by raising the tax value of cars, Meseznikov claimed, the Treasury will indirectly tax middle class workers. Workers who earn NIS 15,500 will lose NIS 600 per month, said Meseznikov, calling the number inconceivable. If approved, the changes would bring in a total of NIS 2.5 billion in tax revenue, according to Treasury officials, who claim money raised through the new system would be used to lower income tax for the middle class. Meseznikov countered that these tax breaks would only reach the upper middle class, and that the best way to encourage the economy is to provide breaks to those who earn less, as well. "Though the proposed reforms were intended to help the working class, as they stand they will instead hurt it," Meseznikov said. Meanwhile, Shraga Brosh, chairman of the Federation of Economic Organizations, called the proposal "populist" and claiming that if the government really wanted to help, it could offer tax credits to those who don't use company cars. "Taking money from one part and giving it to another part is a sad joke," he said.


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