Netanyahu reaffirms plan to cut taxes

PM-designate says as soon as he's sworn in, he'll drop income, corporate taxes, prevent dismissals.

netanyahu fischer 248 88 (photo credit: Channel 2 [file])
netanyahu fischer 248 88
(photo credit: Channel 2 [file])
Prime Minister-designate Binyamin Netanyahu on Thursday reiterated that he plans to lower taxes this year, even though the Bank of Israel and the Treasury have expressed concerns that government revenues would adversely affected. "The first step will be to lower income taxes for low- and medium-income earners, and corporate taxes for small businesses, in an effort to boost the private sector and encourage consumer spending," he said, denying reports in the Hebrew press that he intends to freeze planned cuts and might even increase taxes. Netanyahu said he would reach agreements with the Histadrut and employers to "bear the burden of preventing dismissals." Bank of Israel Governor Stanley Fischer, who might become Netanyahu's most important economic adviser, has in recent months warned that any tax cuts intended to boost the economy would be problematic, and not a realistic option, in light of a recession, a big downturn in tax revenues and a growing budget deficit. In a meeting with Netanyahu last month, Finance Minister Ronnie Bar-On warned that together with the costs of Operation Cast Lead, rising defense expenditures and measures to mitigate the effects of the economic crisis, the budget was already expected to have a deficit of about 6 percent of GDP, leaving very little room for maneuvering. In February, tax revenues dropped 15.4% to NIS 13.5 billion compared with the same month last year. As part of his economic plan, Netanyahu pledged to support and help factories and businesses in the Negev and the Galilee. In addition, he reiterated his commitment to increased investment in infrastructure, with a priority on roads, the railroad system, water and energy. Netanyahu also promised a comprehensive plan to cope with the credit crisis.