Expectations of a tax cut on capital gains on the stock market are growing in anticipation of recommendations by the National Economic Council. Council chairperson Prof. Avi Simhon said recently that work in the matter was almost complete and the recommendations would be submitted to Prime Minister Benjamin Netanyahu after the Sukkot holiday.
Netanyahu asked Simhon to consider the matter and submit recommendations, following a cabinet meeting on the state of the economy and other macroeconomic affairs. During the meeting Minister of Science, Technology, and Space Ofir Akunis called for a cut in taxes on stock market capital gains. Akunis argued that lowering the tax would substantially increase activity on the stock market, which would eventually increase income from the tax.
Minister of National Infrastructure, Energy, and Water Resources Dr. Yuval Steinitz, who was present at the meeting, admitted that he had made a mistake when he raised the tax from 20% to 25%. Minister of Finance Moshe Kahlon previously strongly opposed lowering the tax on stock market capital gains because he regarded it as a benefit for the wealthy, which ran counter to his belief that taxes on labor should be cut. Kahlon did not respond today to a question from "Globes" about his views on the subject. Kahlon previously said more than once that he believed in the controversial economic outlook that cutting taxes led to increase tax revenues.
The calls for cutting taxes on capital gains from stock exchange securities have accompanied Netanyahu's government from the start, especially in view of the decline in trading volumes on the Tel Aviv Stock Exchange (TASE) and the Ministry of Finance's efforts to lower housing prices by driving investors out of the housing market. The campaign lost momentum in 2017, which was a peak year for TASE offerings and later by the halt in housing price increases and the drop in the proportion of investors among housing purchasers to the lowest level in a decade. The main argument by investors is that the tax rate on different investment instruments should be equalized, while as of now, conditions for real estate investments are better because of the exemption on rental income up to NIS 5,000 a month. On the other hand, it should be kept in mind that in contrast to securities investments, real estate investments are subject to purchase tax.
Capital gains tax on most income in Israel, including the sale of shares in stock market trading, was raised from 20% to 25% in 2012 at the recommendation of the Trajtenberg Committee. The tax rate on capital gains from the sale of shares, options, and mutual funds was 15% until 2006, when it was raised to 20%. Controlling shareholders in companies pay 30% capital gains tax. Additional taxes paid by stock market investors include a 25% tax on dividends and a 25% on interest on bonds.
Published by Globes [online], Israel business news - www.globes-online.com - on September 16, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018