Silvan Shalom: treasury stalling negative income tax

In a bill submitted to the Knesset former finance minister Silvan Shalom (Likud) suggests implementing a negative income tax, which will be applicable to gross monthly salaries of up to NIS 5,000.

Shalom said "the minister of finance would like to submit a bill to implement negative income tax, but his office is not enthusiastic about the idea. The ministry is stalling on the efforts. I believe that the bill will speed up the process within the ministry, and as a result the ministry will submit a bill of its own."

Finance Minister Avraham Hirshson recently announced he would work toward a negative income tax in Israel.

Shalom met over a period of several months with former members of the Tax Reform Committee, which dealt with the tax reform in the capital market.

In a press conference yesterday, Shalom said implementation of negative income tax would focus on households with at least one wage earner, and single parent families with at least one child under the age of 18, whose income is less than NIS 5,000. The benefit for one person will be 30 percent of the difference between the person's income and the maximum of NIS 5,000.

Shalom estimates the annual loss of revenue as a result of implementing negative income tax would reach NIS 1.2 billion, and emphasized that experience has shown that countries that have applied negative income tax showed a substantial drop in poverty among families in which a person was employed.