The Knesset Finance Committee approved a bill intended to head off tax deductions for childcare costs for working mothers. Under the bill, women will instead receive an additional tax credit worth only NIS 197 shekels for every child under age 5 - and only starting in 2012.
The coalition pushed through the Finance Ministry's proposal with no objections and only two abstentions in the committee. The law will now go to the Knesset plenum for a final vote as part of the 2009-2010 budget package.
The law is meant to torpedo the recent Supreme Court decision recognizing working mothers' childcare costs as tax deductable.
The court's decision would have cost the treasury NIS 3 billion a year, while the treasury's proposal will cost the state only 20% of that, or NIS 600 million. The difference, of course, comes out of the pockets of working moms.
In addition, Israel Tax Authority figures published yesterday showing how much the treasury's proposal would give working women was wrong, TheMarker discovered. Yesterday the Finance Ministry said there was little difference between the tax benefits under either proposal - and this is what the treasury told the Finance Committee - but the corrected figures tell a different story. The ministry said it was an honest mistake.
For example, women making NIS 7,000 to NIS 10,000 a month gross will earn NIS 58 a month more after tax, if they have one child under age 5 - and only starting in 2012. The original treasury numbers claimed the tax break would be NIS 255 a month.
Women making less than NIS 7,000 a month will get nothing.
Women making more than NIS 10,000 a month will get NIS 197 per child under age 5 - starting in 2012.
As to whether the new tax credits will be implemented, 2012 is the year before the next scheduled elections, though the treasury can attempt to change the law any time before then.
The new law expressly states childcare costs are not tax deductible, specifically contradicting the Supreme Court decision. In addition, the law explicitly states that travel expenses are not tax deductible.
What the law does give is an additional NIS 50 million in 2010 for building daycare centers. Starting in September 2010, the state will allocate another NIS 320 million for daycare subsidies. Originally the treasury had proposed doing so only in 2011, but reached a deal with the opposition to move up the date. In return, the opposition agreed not to oppose the law.
The bill was part of a compromise reached between the treasury and Tzipi Hotovely (Likud), chairwoman of the Knesset Committee on the Status of Women, as well as women's organizations.
The Finance Ministry said the committee's decision was a balance between the Supreme Court decision, which benefited women with high salaries, and the policy designed to help the middle and lower classes.
Hotovely said yesterday: "The proposed new law is a start and reflects national interests at a time when it is not possible to allocate billions of shekels from the budget," she said.
MK Shelly Yachimovich (Labor) said the decision was just, but still only helped 25% of working women - 75% do not make enough money to pay income tax.
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