The Ministry of Finance has decided to implement its pledge to cancel a series of tax exemptions as it attempts to bring down this year's expected record budget deficit. Even som the exemptions targeted are relatively insignificant, while the far more substantial exemptions such as 0% VAT on fruit and vegetables, the VAT free zone in Eilat and the exemption of advanced training funds will remain in force.
“IDF Radio" (Galei Zahal) reported this morning that the Ministry of Finance plans imposing taxes on company cellular telephones provided to employees. The Ministry estimates that there are currently two million such mobile phones, which are exempt from tax, and which are used to make private calls. Ministry officials calculate that the cancellation of this exemption will generate NIS 200 million in taxes annually. The maximum tax payment of the value of such mobile phone use will amount to NIS 70 per month.
The Ministry has also decided to cancel the VAT exemptions on overseas tourist payments for hotels stays and car rentals. This measure is expected to earn the economy NIS 500 million.
In addition the Ministry of Finance has decided to include in the 2009 Economic Arrangements Bill the cancellation of the tax exemption on lottery winnings. At present prizes of up to NIS 50,000 are exempt from tax. Officials have for some time considered this an unnecessary perk for lottery winners and they plan lowering the tax threshold on prizes to NIS 5,000.
The Ministry of Finance also intends cancelling the income tax exemptions for foreign sportsmen and journalists. The maximum tax rate these residents are currently required to pay is 25% compared with 46% for the general population. This measure will bring in an extra NIS 20 million per year.
The Ministry of Finance expects the budget deficit to reach an unprecedented NIS 40 billion in 2009, while these planned measures will bring into the Ministry an extra NIS 1 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009