Payroll tax hike halved

The employers tax will rise by only 0.25% rather than 0.5%, Prime Minister Benjamin Netanyahu has decided.

Payroll tax will rise by 0.25% and not 0.5% on January 1 in order to ease the burden on employers, Prime Minister Benjamin Netanyahu has decided. The tax was supposed to rise from 6.5% to 7% but will now increase to only 6.75%.

The significance of the lower hike is that it will leave a NIS 500 million hole in the budget that will have to be found from other means.

As "Globes" reported at the start of December, the man behind this initiative is Prime Minister's Office director general Harel Locker who handles economic matters on behalf of Netanyahu. Since the decision by Minister of Finance Yair Lapid and his officials to cancel the income tax hike, Locker has thought that the correct use of surplus taxes that have been collected is to invest them in payroll tax and companies tax, to encourage economic activity by raising investment in the economy while cancelling taxes that "harm employment" as he puts it.

In an interview with Globes TV at the Israel Business Conference, Locker welcomed the lowering of income tax for individuals but added that he would also have expected a measure in the area of taxes on businesses.

Manufacturers Association director general Amir Hayek also welcomed the measure and said that it was a move in the right direction. He said, "It shows that the prime minister and minister of finance care about the economy and industry."

Published by Globes [online], Israel business news - - on December 26, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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