Knesset Passes Bill Granting Negative Tax to Low Income Workers

Tax to be granted only to workers whose earn between NIS 1,725-5,000, and only in Wisconsin Plan communities.

The Knesset plenum passed Tuesday in its second and third readings a bill that will grant negative income tax, but only to workers whose gross monthly salaries range between NIS 1,725 and 5,000, and only in communities in which the Wisconsin Plan, a privatized welfare-to-work program, operates.

A negative income tax is a form of benefit payment intended to reduce levels of poverty while simultaneously supporting industry. In contrast to the current method in which benefits are paid, a negative income tax is paid only to low-income workers and not to the unemployed. The

The bill that was approved derived from a cabinet bill proposed by Finance Minister Roni Bar-On and a separate one by MK Silvan Shalom (Likud).

The negative tax will be granted to those workers - including the self-employed - above the age of 23 that have children, and to those workers and self-employed workers above the age of 55 without children, or whose children are above the age of 19.

A worker who has between one and two children is entitled to a grant of up to NIS 275 per month, and a worker with three or more children will be entitled to a grant of up to NIS 400 a month.

The negative income tax will be paid in the middle of 2008 for income from 2007, and will be divided into four equal payments directly into the workers' bank accounts, and not through the employer.