BREAKING NEWS

Knesset approves gov't tax hike package in final readings

By NADAV SHEMER

AUGUST 6, 2012 22:40

The Knesset approved the government’s multi-billion shekel tax hike package Monday, although only after Prime Minister Binyamin Netanyahu agreed not to impose an increase on middle-income earners.

The Bill to Shrink the Deficit and Deal with the Repercussions of the International Economic Crisis passed its second and third (final) Knesset readings with 28 in favor and 16 opposed. The bill underwent an accelerated legislative process, passing through the Knesset House Committee in the morning and a first plenum reading in the afternoon, followed by two Knesset Finance Committee review meetings before becoming law in the evening.

Value Added Tax will rise by one percentage point to 17% September 1. All income between NIS 14,001-41,830 per month will be taxed an extra 1% and all income above NIS 67,000 per month will be charged a 2% surtax from January 1, while the green tax, purchase tax on investment apartments and employer contributions to the National Insurance Institute will all be updated.

An estimated 421,000 workers escaped any income tax hike after Netanyahu and Finance Minister Yuval Steinitz reached a last-minute agreement with Knesset Labor, Welfare and Health Committee Chairman Haim Katz to eliminate a 1% increase to the NIS 8,881-14,000 bracket.

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