Committee Rejects Attempt to Cut NII Payments for the Rich

The rich will not get as big a tax cut as Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz had planned: The ceiling for National Insurance and Health Tax payments for 2011-2012 will remain at the present NIS 79,750 a month, the Knesset Labor, Welfare and Health Committee decided yesterday. This means that people earning up to that amount, 10 times the average wage, will continue to pay NII deductions and Health Tax on their gross income up to that amount. Those earning more will continue to be exempt from payments over that limit. The treasury had proposed in the Economic Arrangements Law for 2011-2012 to gradually lower this limit to NIS 56,000 in 2012.

The committee members present at yesterday's meeting voted unanimously in favor of keeping the ceiling at its present level. The limit was raised in 2009 from the previous five-times the average income level, about NIS 40,000 a month in gross salary. The present average wage is NIS 7,975. The ministry had proposed lowering the limit in 2011 to eight times the average wage, and then to seven times in 2012

Representatives of the self-employed, chambers of commerce and the Manufacturers Association all objected to keeping the ceiling at its present level.

Committee chairman Haim Katz (Likud ) said: "When I see the treasury's request to freeze alowances for Holocaust survivors, recipients of guaranteed income allowances and the elderly, I will not allow it." Katz said he was raising the ceiling for the NII exemptions above the treasury's request to protect the elderly, so "those who earn more will continue to pay more."