Business in Brief

Treasury mulling other austerity measures if Knesset balks at tax increases

If the Knesset fails to approve current tax increase proposals, senior Finance Ministry officials are considering other austerity measures, including asking that National Insurance Institute benefits, which are currently linked to the consumer price index, not be adjusted for inflation in the future. The alternative measures are being discussed because, although the ministry’s budget proposal for this year and next has already secured cabinet approval, the Knesset may reject the tax increase provisions when MKs vote on the budget bill.

Other suggestions that have been discussed by officials include requiring housewives to pay a health tax and National Insurance Institute premiums, and a 3.5% purchase tax on those who trade up to more valuable homes. All of these options are expected to face strong opposition in the Knesset. ‏(Moti Bassok‏)

Settlement agreement on relocation of Sde Dov airport submitted to Tel Aviv court

A compromise agreement between the government and private landowners in the vicinity of Sde Dov airport in north Tel Aviv was submitted to the Tel Aviv District Court yesterday. The agreement is designed to allow for the airport’s relocation to Ben-Gurion International Airport. It will also pave the way for developing 16,000 housing units on the site. The deal was reached between representatives of the landowners, the Finance Ministry and the Israel Lands Administration, and is to require the landowners to collectively pay NIS 20 million of the cost of relocating the airport, from which domestic flights operate.

The NIS 20 million would be linked to inflation, but the total cost of the relocation is estimated at NIS 230 million. At least one interested party has indicated an intention to ask the court to reject the compromise. ‏(Ranit Nahum-Halevy‏)

Water rates to gradually decline from next year

The price of water will be going down at the beginning of next year due to a compromise worked out this week between the Finance Ministry and the Union of Local Authorities. The agreement will allow a reform plan for municipal water corporations to move ahead, with some modifications. Water rates will gradually be reduced by a total of 5% through the end of 2015.

The rate reduction was designed to force the water companies to become more efficient, but the compromise will leave it up to water companies to decide whether they should consolidate and form regional water companies. Initially the ministry was insistent that the country’s 55 municipal water corporations be reduced through mergers to 13. The details of the compromise are to be included in the Economic Arrangements Bill that accompanies the budget legislation. ‏(Moti Bassok and Avi Bar-Eli‏)