The Federation of Israeli Chambers of Commerce (FICC) issued a statement Monday in praise of Prime Minister and Acting Finance Minister Ehud Olmert for his decision to eliminate the purchase tax on a wide range of consumer items. The next step, in the view of the FICC, is lowering income tax levels.
On Sunday night, Prime Minister Olmert signed an order directing the Finance Ministry to lift purchase taxes from dozens of durable goods and cosmetics, including major household appliances such as refrigerators and air conditioners. The cuts, expected to total 400 million shekels in lost taxes, were meant to "encourage growth" and give consumers greater freedom of choice, according to the Prime Minister.
Uriel Lynn, President of the FICC, said, "Eliminating the purchase tax is a move in the right direction, which will give an additional push to the economy's growth and increase purchasing power in the local market. This move also has significant social import, for by this measure products are made more available to the low-income population."
The FICC, the nation's largest employers' association, noted that the current annual economic growth of 5% will be bolstered by the new tax cuts.
"Eliminating the purchase tax is a move in the right direction." - FICC President Uriel Lynn
The next step, Lynn recommends, is to cut direct taxes at the lower income levels. With an average Israeli salary currently estimated to be 7,383 shekels per month, Lynn proposes cutting taxation such that those who earn between 4,170 shekels and 11,140 shekels per month will not pay more than 25% in income tax. About 30% of the working population in Israel falls in that category, according to the FICC.
Lynn explained, "At the conclusion of the tax reform measures in 2010, the direct tax burden of 30% will still be high, disproportionate to [the average] income level and relative to higher tax brackets. Lowering the direct tax will constitute a real incentive for seeking employment.... It will increase motivation to move ahead in terms of level of income."
The FICC is the non-profit, autonomous umbrella organization of six regional Chambers of Commerce, in Tel Aviv, Jerusalem, Haifa, Beer Sheva and Nazareth.
On Sunday night, Prime Minister Olmert signed an order directing the Finance Ministry to lift purchase taxes from dozens of durable goods and cosmetics, including major household appliances such as refrigerators and air conditioners. The cuts, expected to total 400 million shekels in lost taxes, were meant to "encourage growth" and give consumers greater freedom of choice, according to the Prime Minister.
Uriel Lynn, President of the FICC, said, "Eliminating the purchase tax is a move in the right direction, which will give an additional push to the economy's growth and increase purchasing power in the local market. This move also has significant social import, for by this measure products are made more available to the low-income population."
The FICC, the nation's largest employers' association, noted that the current annual economic growth of 5% will be bolstered by the new tax cuts.
"Eliminating the purchase tax is a move in the right direction." - FICC President Uriel Lynn
The next step, Lynn recommends, is to cut direct taxes at the lower income levels. With an average Israeli salary currently estimated to be 7,383 shekels per month, Lynn proposes cutting taxation such that those who earn between 4,170 shekels and 11,140 shekels per month will not pay more than 25% in income tax. About 30% of the working population in Israel falls in that category, according to the FICC.
Lynn explained, "At the conclusion of the tax reform measures in 2010, the direct tax burden of 30% will still be high, disproportionate to [the average] income level and relative to higher tax brackets. Lowering the direct tax will constitute a real incentive for seeking employment.... It will increase motivation to move ahead in terms of level of income."
The FICC is the non-profit, autonomous umbrella organization of six regional Chambers of Commerce, in Tel Aviv, Jerusalem, Haifa, Beer Sheva and Nazareth.