Steinitz Launches New 2% Surtax on the Rich

Tax applies to incomes of NIS 800,000 a year, which includes not just salary but capital gains, dividends, interest, rents, etc. so that now any employee with a monthly salary of over NIS 67,630 will pay the extra 2% starting January 2013.

The rich will be paying higher income taxes as of this year. Finance Minister Yuval Steinitz signed the new tax regulations in recent days, which levy a 2% surtax on incomes of NIS 800,000 a year. This sum includes taxable income from any source - not just salary - including capital gains, dividends, interest, rents, etc. Steinitz had to sign the new withholding rules, so that now any employee with a monthly salary of over NIS 67,630 will pay the extra 2% starting January 2013. The treasury expects the tax hike to bring in NIS 600 million a year in higher tax revenues.

The catch is that the treasury will actually see three quarters of this money in cash only sometime near the middle of 2014, when the high earners actually file and pay their taxes for 2013.

The Finance Ministry expects about NIS 150 million to come in at a steady pace over the course of the year in higher withholding taxes on salaries, with the remaining NIS 450 million entering the state coffers only next year. The NIS 800,000 limit is linked to inflation annually.

The cabinet approved the surtax last summer and on August 13, Amendment 195 to the income tax code was published officially - but Steinitz signed the necessary withholding regulations only yesterday - after the election.

Bloomberg
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