Daily Israel Report

Ariel: Lapid VAT Exemption Plan Won't Get Out of Committee

Housing Minister Uri Ariel (Jewish Home) slammed Yair Lapid's plans to 'accommodate' haredi and Arab Israelis in his VAT exemption plan.
By Moshe Cohen
First Publish: 5/12/2014, 7:27 PM

Uri Ariel
Uri Ariel
Flash 90

Housing Minister Uri Ariel (Jewish Home) said Monday that he would make sure that a plan by Finance Minister Yair Lapid to allow haredi and Arab Israelis a VAT exemption on first-time home-purchases of only NIS 600,000 did not get into law. Speaking at a meeting of the Knesset Finance Committee, Ariel said that his Ministry would never support it, and the Finance Committee would never approve it.

On Sunday, Lapid announced that as a compromise to ensure that his plan providing a VAT exemption for first-time home buyers is able to stand a court test, individuals who have not served in the IDF will also be eligible for the exemption – but only for the purchase of homes up to NIS 600,000 (roughly $170,000) in value.

The proposal is an extension of an announcement Lapid made in March, which proposed the reduction of the cost of homes for young families. According to the plan, first-time homebuyers would save 18% (the amount of VAT) on homes, and would be prohibited from selling the house for five years.

The Ministry has its own plan to lower housing costs, with prices tailored to the pocketbooks of those eligible for the program. The Director General of the Ministry, Shlomo Ben-Eliyahu, addressed Committee MKs on the issue of housing prices – but did not relate to Lapid's proposal at all, touting only the Ministry's plan.

MK Zehava Gal-On (Meretz), a member of the Committee, spoke out against Lapid's plan, calling it a “bluff. I hereby protest against the support Attorney General Weinstein gave to the plan by approving the NIS 600,000 limit for hareidi and Arab Israelis. Why should they be discriminated against?” She was joined by MK Erel Margalit (Labor), a well-known figure in Israel's business committee. “The zero-percent VAT plan is discriminatory, and should not be implemented,” he said.