The cabinet will be voting on the Trajtenberg Committee's tax proposals on Sunday.
The cabinet will discuss the other three sections of the committee's recommendations on socioeconomic change over the next few weeks.
Prime Minister Benjamin Netanyahu hopes to show he is acting to narrow social gaps and is pushing for approval of the changes. He has put pressure on officials from the Finance Ministry, Israel Tax Authority, State Revenue Administration and Justice Ministry to complete their work on the final version before Sunday. Many of the recommendations require legislative changes in the Knesset after the cabinet approves. Other recommendations can be implemented through administrative regulations that do not require legislation.
Netanyahu wants quick approval of the tax section, partly to show the public that his socioeconomic promises are not just talk. This is particularly important amid the planned renewal of the social protests around the country this Saturday night.
The Trajtenberg Committee's tax proposals are a main pillar of the recommendations; they are a mini-reform of the tax system. The recommendations are supposed to be revenue neutral, meaning overall state tax collections will remain the same, with the balance of who pays how much changing. The recommendations are expected to favor the middle class.
One major recommendation is to scrap the already approved cuts in income and corporate tax sponsored by Netanyahu and Finance Minister Yuval Steinitz. The highest marginal income tax rates were scheduled to drop from 45% to 39% by 2016, with corporate tax falling from 24% to 16%.
Instead, the Trajtenberg Committee recommended increasing tax rates for the highest earners, increasing tax to 48% on incomes over NIS 40,000 a month starting next year and raising corporate tax to 25% - and considering a further corporate tax hike to 26% in 2013.
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