Finance Committee okays deal on child care bill

Working mothers earning more than the taxable income threshold are slated to receive tax credits for every child up to age 5, starting in 2010.

pregnant 88 248 (photo credit: Ariel Jerozolimski)
pregnant 88 248
(photo credit: Ariel Jerozolimski)
The Knesset Finance Committee on Sunday unanimously approved an amended version of a bill to recognize child care as a tax deductible expense for working mothers after a compromise deal was struck with the Finance Ministry. The approval came after the Finance Ministry reached a brokered agreement with the Committee for the Advancement of the Status of Women Chairwoman MK Tzipi Hotovely (Likud). The price tag for the agreement is NIS 600 million, say Treasury officials, and will include a grant in accordance with the negative income tax law for mothers of children up to 2 years old earning less than the taxable income threshold in 2009, costing an estimated NIS 75m. over the next two years. In addition, working mothers will be awarded tax credit points. According to the deal, mothers earning more than the taxable income threshold are slated to receive tax credits for every child up to age 5, starting in 2012, instead of the Treasury's initial proposal of 2015. But following the intervention of MK Ronit Tirosh (Kadima), the start date was pushed forward to 2010. The bill approved Sunday also included new clauses increasing subsidies for day care centers, pre-nursery play groups and afternoon child care facilities, which will amount to NIS 320m. from September 2010 as well as NIS 50m. for building new day care centers. In addition to adding clauses, the Treasury agreed to withdraw the 90 reservations that it had filed in opposition to the revised law to reimburse working parents for child care as part of the deal, which was brokered by Finance Committee Chairman MK Moshe Gafni (UTJ). "The plan constitutes a significant step in the revolution for working mothers in Israel," said Hotovely, adding that it will mostly aid working-class and middle-class mothers. "This is the beginning of the way toward free education for the early years, which is the key to integrating mothers in the work force." Tirosh also claimed victory, arguing that the change from 2015 to 2012 was a "victory for the opposition" but added that she would continue to fight for the original law - that child-care expenses be recognized for tax purposes as work-related expenses - to reach a vote on the house floor. "I am not satisfied by the current proposal," said Tirosh. "Every woman must understand that expenses for childcare are necessary aspects of joining the work force for women. If you recognize child care expenses as an expense for income, more women will not only work out of the house but will work more hours. And when they work more hours - surprise, surprise, they suddenly reach higher tax levels, and then there will not be the erroneous and absurd claim that women with low salaries don't reach the necessary tax bracket and thus shouldn't be granted a credit point." Iris Starck, assistant director of the Accountants' Association said that "even though the granting of an extra tax credit point to working women seems like a success in relation to the past, it expresses a pathetic and paltry expression of the government's preference for working parents over parents who simply earn money through child benefits". Starck said that the Finance Committee decision will not help more women enter the work force as an additional NIS 197 per month for child care for children under five does not even begin to cover the expenses for such care, which costs upwards of NIS 1,900 per month. Starck had proposed an alternate solution that would offer a graduated payment plan that would offer nearly a full refund for costs of basic care for children under three, as well as negative income tax for low-income parents for whom tax credits are not relevant. "I am disappointed in all of the female MKs, except for Hotovely, who stood strong against everyone who chose to ignore the importance of the law and did not join forces against their faction chairs and the Treasury in order to force them to enforce the law as it was intended," said Starck. Jerusalem Post staff contributed to this report