Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism) is demanding that the government cancel its planned income tax hike on salaries of NIS 8,881-14,400, and that the companies tax be raised by 1% instead. Otherwise, he will not submit the fiscal package to a vote tomorrow morning. A 1% hike in the companies tax would generate NIS 700 million in taxes, slightly more than the proposed income tax hike on the third tax bracket.
The Ministry of Finance opposes Gafni's proposal, and Prime Minister Benjamin Netanyahu would veto it.
Ministry of Finance director general Doron Cohen told the Finance Committee that taxpayers earning NIS 9,000 a month would pay an additional NIS 11 in taxes. "The harm to low income-earners is minimal," he said, adding, "The tax burden on the middle class is not onerous. Life is tough, but Israel's income tax structure is not burdensome."
The legislation on trapped profits and tightening tax collection will be separated from the fiscal package, mainly because of the need for separate legislation on these measures. "This will have to be passed by the end of the year, otherwise, we'll have to raise other taxes," said a senior Ministry of Finance official in response.
Gafni also asked to hold a separate Finance Committee meeting on real estate taxes, and summoned Minister of Housing and Construction Ariel Atias to the meeting.
Gafni also requested minor changes to the fiscal package, which are not expected to delay tomorrow's committee vote. These measures mainly affect the haredim (ultra-orthodox): another tax exemption on home sales that are liable to taxes, and recognition of a working couple as two separate tax entities for income tax purposes.
Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2012
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