Gafni Vows to Cut Tax for Middle Class

MK Moshe Gafni (United Torah Judaism) pushing ahead to pass a number of far-reaching laws in the taxation sphere.

The chairman of the Knesset Finance Committee, MK Moshe Gafni (United Torah Judaism), is not waiting for the recommendations of the Trajtenberg Committee on socioeconomic change. Instead of holding fire until they reach the Knesset in over a month's time, Gafni is pushing ahead to pass a number of far-reaching laws in the taxation sphere. Gafni wants to approve a number of the recommendations next week in the Finance Committee.

Gafni also wants to pass a number of laws that go well beyond the Trajtenberg recommendations that, in his opinion, will create "social justice": Providing subsidized mortgages for young couples; construction of apartments for young families, financed by the state budget; returning control of water prices to the Finance Committee; lowering electricity rates; and even taking drastic steps to cut the profit margins in the food industry.

Moshe Gafni - Emil Salman
Emil Salman

The Trajtenberg Committee's recommendations on reducing economic concentration are appropriate, said Gafni, although he added the Finance Committee may have also have to strengthen these recommendations. Such changes could come, for example, in the areas of limiting executive salaries in public companies and dismantling pyramidical control of subsidiary companies.

"The centralization in the Israeli economy has reached monstrous proportions. I am not against the tycoons, but we need to deal with [economic] concentration and not with kid gloves," Gafni stated. "We need to legislate the recommendations of the committee on economic concentration or implement them through administrative means." He added that, in the end, "it is the middle class that pays the price of concentration."

At the beginning of next week, Gafni will call a special meeting of his committee to cancel the fuel tax increase scheduled for 2012. The committee will also vote on canceling the corporate tax reduction scheduled to take effect next year - while leaving the income tax breaks for the middle class in place. These steps in part contradict the Trajtenberg Committee recommendations.

The committee did recommend cutting fuel taxes and raising corporate taxes, but also wants to do away with the scheduled income tax cuts for the middle class. "I do not intend to wait for legislation on taxation until the end of 2011," Gafni told TheMarker yesterday, saying he will not allow the government to freeze the tax cuts and harm the middle class.

"In May 2011 the [Finance] committee already decided to freeze the fuel tax increase for 2012, to freeze the continuation of corporate tax reductions, to freeze the income tax cuts for those making over NIS 21,000 a month and to continue to reduce the tax burden on the middle class," said Gafni.

The freeze on tax cuts for those earning over NIS 21,000 a month and the freeze on corporate tax cuts would be the sources for the money to allow the tax breaks for the middle class, and Gafni said this was agreed with the former head of the Finance Ministry's budgets division, Udi Nissan.