Less than a week after the Ministry of Finance surprised the public and proposed collecting a 3.5% purchase tax on the entire cost of apartments for people moving upmarket without offering any explanation in the budget breakdown, the extent of the scandal is becoming clear. Sources inform "Globes" that no methodical examination of the ramifications of the proposed tax imposition, and those who will be hit by it, has been undertaken by Ministry of Finance staff, although this is the third largest clause in the tax chapter.
The belief is that the clause was put into the budget by Reuven Kogan the Finance Ministry budgetary division deputy director with responsibility for real estate. Senior economic figures also believe that Minister of Finance Yair Lapid was not fully told about the implications of the tax and how it would harm homebuyers.
Lapid was unavailable to comment on the matter and the Ministry of Finance spokesperson said, "Staff work has been carried out by the economics and state revenues division, the budgetary division, and the Tax Authority. There have been discussions with the participation of the relevant professional bodies."
Following the Ministry of Finance's response, "Globes" this morning sought a range of data that should have been available as part of the supposed methodical staff work on the purchase tax. "Globes" requested a breakdown of people buying homes to move upmarket in 2012 and the first months of 2013 and of those who moved from smaller or cheaper apartments. The Ministry of Finance was also asked to provide the newspaper with the average household income of those moving to more expensive apartments compared with those moving to cheaper apartments. "Globes" also sought a breakdown of the ages of those moving to more expensive apartments.
Though long hours were given for the information to be provided, and although such data should have been available as part of the staff work regarding the apartment purchase tax clause, no information was forthcoming from the Ministry of Finance.
The belief is that the Ministry of Finance refused to give out the data, which would reveal the injustice of the proposed tax and the extent to which it would hit lower income groups, especially in comparison with alternative taxes, for example, on those renting apartments without an exemption.
Published by Globes [online], Israel business news - www.globes-online.com - on May 13, 2013
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