Labor party chairwoman Shelly Yacimovich 370.
(photo credit: Marc Israel Sellem)
The Knesset Finance Committee on Monday approved Finance Minister Yair Lapid’s
plan to increase the value added tax to 18%, as committee chairman Nissan
Slomiansky (Bayit Yehudi) announced plans to seek a differentiated VAT in order
to make the tax less regressive.
The committee approved the measure by a
vote of 9 to 5, despite its unpopularity and fierce rhetoric in the committee,
both from the opposition and the coalition.
Opposition leader Shelly
Yacimovich (Labor) attempted to block or, at least, postpone the increase by
imposing procedural hurdles to its passage in the Knesset, but the committee
ultimately overruled her.
The government estimated that increasing VAT
from its current 17% would net the state NIS 4.6b. in revenues, helping to bring
the budget deficit to its new target of 4.65% for 2013.
the VAT increase a “disgrace” implemented at a time when large corporations were
enjoying big tax breaks.
“We recently learned that the four richest
companies in the economy received NIS 4 billion in benefits. That’s exactly what
you make by increasing VAT,” she said.
Labor MK Miki Rosenthal slammed
the measure, claiming it was regressive and would increase inequality, and said
the vote should be postponed until the overall budgetary picture was
Likud Beytenu MK Orly Levy-Abecassis even went so far as to say,
“There are times I wish I were in the opposition,” while Hatnua MK Elazar Stern
called it “professional negligence,” because the tax would be paid “primarily by
Slomiansky agreed that a flat VAT rate was problematic, and
promised to seek a way to put together a differentiated VAT, which may not
affect the poor as heavily.
“I intend to establish a subcommittee to
examine differentiated VAT, as is done in many countries around the world,
including most of the OECD countries,” he said, promising that both coalition
and opposition parties would be included in the committee.
also hit back at criticism from Shas and UTJ about the VAT rise, saying that
during their time in the government coalition, they voted to increase VAT twice.