BoI Governor: 0% VAT will raise home prices

Karnit Flug

Karnit Flug's views put her on a collision course with Finance Minister Yair Lapid.

Governor of the Bank of Israel Dr. Karnit Flug has slammed the 0% VAT plan for new homes for first time buyers in her survey to the Monetary Committee. She said, "The 0% VAT plan will fuel home price rises and increase demand. The most efficient instrument for lowering home prices is increasing the supply of apartments."

Flug's comments put her on a direct collision course with Minister of Finance Yair Lapid who is leading the 0% VAT plan for the purchase of first homes costing up to NIS 1.6 million. Lapid is convinced that plan will be decisive in bringing down prices.

Flug also commented on Lapid's plans to place restrictions on executive salaries in the financial sector. She said, "The norms that the Finance Minister is proposing on remuneration in the financial sector must be broad and applicable to all public companies."

Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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