Finance Committee Expected to Back Down on Key Budget Reforms
Reforms that touch upon income tax, purchase tax on homes and the imposition of health tax and National Insurance payments on housewives are among the ones that may be revised.
The Knesset Finance Committee is expected to remove some of the key reforms called for in the draft budget, clauses that total billions of shekels.
It is likely to moderate the increase on income tax, cutting the planned increase from 1.5% on all marginal rates to only 1% on the higher income brackets. The original plan would increase state revenues by NIS 4 billion.
The committee also objects to the current plan to impose purchase taxes on all second-time home buyers. Currently, buyers enjoy an exemption on the home’s value of up to NIS 1.4 million, so long as they own only one home. The current draft budget calls for imposing the 3.5% tax on anyone who has already owned one home.
It also objects to the Finance Ministry’s plan to cap the ceiling for tax exemptions on pension savings to salaries of NIS 15,000 a month, down from the current cap of NIS 35,000 a month; to imposing health tax and National Insurance payments on housewives; and to doing away with tax credits for recent college graduates. If the committee changes any of these clauses, new places will need to be found for budget cuts or tax increases.
On Monday, the Knesset opposition leaders called on Knesset chairman MK Yuli Edelstein to scale back the Economic Arrangements Bill, which accompanies the budget, and which is used to push through many reforms, economic or otherwise.