Cabinet Approves Treasury Plan for Child-care Credits

More bad news for working mothers with small children: Yesterday the cabinet approved Finance Minister Yuval Steinitz's proposal to gradually introduce tax credits for child care starting only in 2011 and increasing annually until 2015.

The treasury's plan will grant an additional tax credit "point," presently worth NIS 196 a month in tax savings, to mothers with children under 1 year of age in 2011, increasing the age every year until 2015, when any child under age 5 will be included. Mothers will receive one point for every qualifying child. (See chart).

The cabinet voted 18 in favor, 3 against and with one abstention for the plan.

Steinitz's proposal will be formalized not as a new law per se, but as an emergency regulation to avoid paying working mothers the tax breaks the Supreme Court ruled they were entitled to as of next year.

The treasury opposed the Supreme Court's order for financial reasons: It claimed the ruling would have cost NIS 2.5 million a year - and, in addition, would also have made it possible to write off the costs of traveling to work, costing the taxman yet another NIS 4-4.6 billion. The treasury's proposal will cost only NIS 285 million a year when fully implemented in 2015.