The Finance Ministry is expected to improve tax benefits for low-middle income earners, in an effort to garner Knesset approval for the cancellation of tax benefits for company car usage. The treasury currently proposes a 2 percent reduction on taxes on salaries between NIS 7,000-12,000.
The treasury is able to further reduce tax rates because of the large surplus in taxes collected this year - about NIS 3 billion above the forecast. According to estimates, only half of the surplus or less is of a one-time nature, reflecting increased economic growth rates and more state revenue from taxes than forecasted in the budget proposal.
Only part of the increased tax revenue is expected to be redirected to tax benefits, since the treasury seeks to reduce the national debt. Nonetheless, a substantial part of the surplus will be dedicated to this end, because the treasury wants to persuade the Knesset to cancel tax exemptions on company car usage.
MK Stas Misezhnikov (Yisrael Beiteinu), the newly appointed Finance Committee chairman, is adamantly opposed to cancelling the tax exemptions on company cars, and in particular, cancellation of the tax exemption for the self-employed.
The Finance Ministry is considering abolishing the discrimination against the self-employed, who do not benefit from negative income tax, but this option currently poses technical difficulties.
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