Hirchson: Tax reform will go on

Goal of lowering income tax levels by 2010 will not be set back by war-related constraints.

By DANIEL KENNEMER
September 4, 2006 05:39
1 minute read.
avraham hirschson 88

avraham hirschson 88 . (photo credit: )

Finance Minister Avraham Hirchson assured the business sector that the reform lowering income tax levels by 2010 will not be set back by financial constraints caused by the war, the Federation of Israeli Chambers of Commerce said Sunday. Hirchson said in a letter to FICC president Uriel Lynn that he was also "surprised" by reports in the Hebrew press that the Finance Ministry was considering stopping the reform to facilitate payment of war costs, but fell somewhat short of Lynn's request for "an unequivocal statement" that the reform was not in jeopardy. Lynn made the request in an August 20 letter to Hirchson, in which he stated his opposition to any such interruption of the planned reform and stressed that - if the reports were correct - the move would be a "grave error." Reducing income tax is the "central axis" of the reform to relieve the burden of direct taxation on individuals, Lynn said. According to former finance minister Binyamin Netanyahu's tax reforms passed by the Knesset last summer, the maximum marginal income tax is to drop from 49 percent to 44% by 2010. Total tax on income would fall to 29% in 2010 from 34% today for incomes between NIS 4,170 and NIS 7,420 per month; to 37% from 41% on income between NIS 7,420 and NIS 11,140; to 42% from 48% on income between NIS 11,140 and NIS 16,000; to 44% from 48% on income between NIS 16,000 and NIS 19,890; and to 44% from 49% on all incomes greater than NIS 19,890 per month. Lynn told Hirchson that the reform would encourage employment, boost purchasing power and improve the situation of workers earning less than NIS 11,140 per month.


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