Minister of Finance Avraham Shochat this afternoon issued an executive order, under the 1956 Savings Law, closing all savings programs to new customers until the Knesset Finance Committee approves the special transitional regulations next week. The order went into effect today at 3:00 PM, and therefore does not affect deposits made up until that time.
The executive order also affects Index-linked savings plans, and foreign currency accounts. Over the past few days, over NIS 5 million have been deposited in savings accounts, and there are reports of large sums of money being deposited in foreign currency accounts abroad.
The Ministry of Finance said the extraordinary measure was taken to prevent attempts, on the part of people with means, to circumvent the new tax law by making large deposits.
The order will remain in effect until the Knesset Finance Committee's expected approval next week of the transition regulations and the arrangements bearing on taxation of savings, inheritance and gifts.
Attorney General Elyakim Rubinstein has approved the transition regulations, and even ruled them to be vital. This means that they may be defended at the High Court of Justice. The State resorted to administrative decrees only twice in the last 20 years: in applying the 1985 economic stabilization program and in connection with the Modai-Bruno plan for taxing financial assets.
Following are the savings schemes that have been closed off to new members: the shekel-denominated savings schemes and the follow-up shekel-denominated savings scheme; the "Tshura" and "Tshura Follow-Up" schemes; the apartment and vehicle savings schemes; the housing savings scheme and the higher education savings scheme for civil service employees.
The tax reform plan will be presented to the cabinet on Sunday. Several ministers, including Eli Yishai, Dalia Itzik and Yuli Tamir, have already announced they will demand amendments in some of the committee’s recommendations. The abolition of half a percentage point tax exemption for working women is also expected to run into opposition in the cabinet. Minister for Internal Security Shlomo Ben-Ami said he would demand a the imposition of a special 60% tax on the wealthy.
The Knesset Finance Committee will convene on Monday to approve the transition regulations. The committee will be requested to approve the inheritance and gift taxes without delay.
Histadrut trade union federation chairman Amir Peretz today announced that the organization would start fighting the recommendations on Sunday. There will be a work stoppage for protest rallies in all trade-unionized workplaces, including schools, from 10 to 11 am on Sunday.
Published by Israel's Business Arena on 4 May, 2000