The Finance Ministry is planning a wide range of higher taxes and cancellation of benefits to help thin out a fat deficit. Knesset Member Shelly Yechimovich (Labor) leaked the proposals on her website.
One revenue raising tactic is applying the 15.5 percent Value Ad Tax (VAT) on fruits and vegetables. Food items currently are exempt for VAT, and changing the tax-free status would probably cause a storm a protest from Shas and Labor, whose platforms include helping lower income families. Both parties are members of the government coalition.
Another proposal that is bound to be met by fierce opposition is lowering the tax credit for students to half a percent.
Working women without children face a loss in tax credits, and the Finance Ministry also is considering a tax on credits for salaries over 5,000 shekels ($1,200) a month.
Higher income earners also face higher taxes, with a suggestion that the capital gains and dividend tax be raised to 12 percent. The Finance Ministry also wants to raise the tax on liquor, after having increased the cigarette tax today (Thursday) by two shekels a pack.
On the spending side of the ledger, construction of the already-approved hospital for Ashdod may be delayed for 10 years. Fines may be placed for water wasters in an effort preserve Israel’s depleting water reserves.
The carrots that may be offered to the public include a rise in child support benefits, a move that Prime Minister Binyamin Netanyahu promised Shas in order to bring the Sephardic religious party into the government.
As previously reported, the Finance Ministry has prepared plans to carry out the Prime Minister’s suggestion that a fund be created to help companies in financial trouble.