Although the Knesset Finance Committee approved the 0% VAT bill, Knesset Speaker Yuli Edelstein is delaying its final passage. The Committee today approved the bill for its second and third readings, and Minister of Finance Yair Lapid and Yisrael Beitenu chairman MK Avigdor Liberman agreed that Liberman's party would vote in favor of the bill in exchange for removal of taxation of medical tourism from the Economic Arrangements bill. Until the coalition heads achieve understandings with Yesh Atid about disputed items, however - the Jewish National Fund bill, the health section of the Economic Arrangements bill, and the amendment to the Government Companies Law - the 0% VAT bill will not be brought to the Knesset plenum for its second and third readings. At the same time, the opposition members of the Finance Committee have submitted a request for revote on the bill, which will take place next Monday. Nevertheless, the coalition is assuming that the bill will be approved, at least in the Finance Committee.
The next stage is bringing the bill before the Knesset plenum for its second and third readings. Edelstein, however, announced today that the bill would not be moved forward until the disputes about the Economic Arrangements bill are solved. "The Knesset Speaker is unwilling to write checks that will bounce," Edelstein's office said. "He can't guarantee that the VAT bill will pass; as of now, there is no state budget, because the Ministry of Finance is not complying with the agreement, supported by the Knesset legal advisor, to conduct a proper discussion of the Arrangements bill, as has always taken place."
Comment: Shay Niv
Lapid and Liberman are up to their necks in the narrowest possible interests. Liberman is concerned about the terribly personal interests of his electorate, such as the good livelihood of several thousand immigrants from the former Soviet Union working as medical tourism agents, while Lapid cares about the bill for exempting purchases of a first home from VAT, a bill that has concentrated attention far out of proportion to its importance, and has become the Finance Minister's personal obsession, instead of a key measure for young couples.
The medical tourism industry and the hospitals warned that levying a 15% tax on medical tourism income and eliminating the VAT exemption for hospitalization of tourists in private hospitals would severely damage the sector. At best, this charge will be rolled over onto the tourists, they explained, but they claim that the most likely scenario is that the medical tourists now coming to Israel will prefer Turkey or Germany. They will simply stop coming.
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2014
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