Your Taxes: October 1: Save the date, save the nation

The government has succeeded in passing a new tax through the back door to help save floundering Israeli companies.

By LEON HARRIS
August 19, 2009 11:43
1 minute read.
taxes 1 88

taxes good 88. (photo credit: )

On May 12, the government resolved to establish a rescue fund to aid businesses facing economic woes. To pay for this, the Law for Economic Efficiency for 2009 and 2010 (alias the budget) imposes a one-time levy on private-sector employers and employees. The employer and the employee must each pay an amount equal to half a day's vacation to the rescue fund. This will be added to the National Insurance Institute contribution for the September 2009 salary. For most employees this will appear as a deduction from their September paycheck paid to them on October 1. How much is a day's vacation? Half the monthly salary divided by 30. This is because the minimum annual statutory vacation equals two weeks per year. How much is the monthly salary? The salary subject to NII contributions for September 2009. So how much will we all pay? The following is a tentative illustration. If your September salary is NIS 10,000, it seems your September paycheck will be reduced by NIS 83 (10,000 X 1/2 X 1/30 X 1/2), which is the employee's share, and your employer will pay another NIS 83. The above is subject to further detailed instructions and forms. In the public sector, separate arrangements will apply to state enterprises to be designated in an order that will be issued by the finance minister. To sum up, the government has succeeded in passing a new tax through the back door to help save floundering Israeli companies. It's not the only back-door tax; there is also a new water levy for many water consumers. Let's hope we don't get called upon too often to save the nation. As always, consult experienced tax advisers in each country at an early stage in specific cases. leonharr@gmail.com Leon Harris is an international tax specialist.


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