The companies tax must not be raised, Ministry of Finance director general Doron Cohen told the Knesset Finance Committee today, because many companies were already struggling. He also said that he regrets that low income-earners are not paying higher income taxes, and that Israel's tax burden is not great.
"We are not proposing to raise income taxes for the two lowest brackets," Cohen said. He added that low income-earners will pay only an additional NIS 11 in taxes, but that "people earning NIS 40,000 will pay hundreds of shekels, and that people earning NIS 80,000 will pay NIS 1,000. This should generate NIS 1.2 billion in tax revenues. The Trajtenberg committee decided that the companies tax would fall no further. The harm to low income-earners is minimal. There is no country in the world where most the low tax brackets pay almost no income tax."
Cohen said that the companies tax should not be raised, in part because rising competition in the mobile market, and the difficulties which he asserts that insurance companies, banks, and retail chains are facing. "Precisely at this time we should not raise the companies tax. Companies that are paying income taxes are struggling - mobile carriers, insurance companies, banks, and retailers… We're talking about companies whose profit margins are plummeting, or at least declining. Raising the companies tax will hurt jobs."
As for the tax hikes, Cohen said, "Obviously, it is hard for everyone, but the tax burden on the middle class is not onerous. Life is tough, but Israel's income tax structure is not burdensome. Harming growth could create much more hardship because people won't have jobs. Another NIS 30 in taxes for a person earning NIS 15,000 will hurt no one."
Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2012
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