Daily Israel Report

Minister Calls for State Discounts for Young Parents

Foreign Minister Avigdor Liberman pushes VAT exemption for young apartment buyers, IDF vets; also subsidized daycare.
By Tova Dvorin
First Publish: 3/5/2014, 8:31 PM

Foreign Minister Avigdor Liberman
Foreign Minister Avigdor Liberman
Flash 90

Foreign Minister Avigdor Liberman introduced a new idea to end Israel's housing crisis Wednesday - to grant a Value Added Tax (VAT; 18.0%) exemption for first-time apartment owners buying apartments worth under 1.5 million shekel ($430,145). 

"The number one economic problem [in Israel] is the high cost of living," Liberman noted, at an accountant's conference in Tel Aviv. "Security is not only about airplanes; it is also when citizens feel that the State treats them fairly and responsibly. When that sense is gone, there's a problem." 

Liberman gave the example that two of his own employees in his office have trouble making ends meet, "even though both parents are working - and a Foreign Ministry salary is not terrible." 

In addition to the VAT exemption, the Foreign Minister also declared that the State should provide full funding for daycare and kindergartens, until 5:00 pm, from ages six months to six years. Liberman noted that the cost would be roughly seven billion shekel (roughly $2 billion) - a small sum in terms of the national budget of 350 billion shekel (roughly $100 billion).  

"It would encourage people to work - for example mothers who can [now] work full-time - and help young couples, who spend thousands of dollars a month on kindergartens," Liberman stressed. "We could do this in [only] two to three years."

The VAT exemption - which he added would be given to young working couples and IDF veterans - would take more time and effort to enact, according to Liberman. The move would require the government to compose a new Committee for Building, Housing, and Industry in charge of supervising the process - the same Committee which was formed to help waves of Russian immigrants settle in Israel in the nineties - and to bring in foreign workers from China to help the process along. 

Liberman also added that Israel would need to create other means for foreign investors to invest in Israel, as the apartments could become very popular, and are tailored specifically for native Israelis - not wealth-builders.