Treasury Wants Sector-based Tax Breaks

Businesses in preferred areas and industries would pay discounted corporate tax rates of only 18% under a new Finance Ministry proposal.

The plan will be discussed by the committee for amending the investments law, which is scheduled to meet for the first time this week. It was set up by the Industry and Trade Ministry and the Finance Ministry.

The proposal aims to create incentives to invest in the country's outskirts and in specific sectors to be determined by the government. These industries may include biotechnology and technology designed to make industry more efficient.

The proposal is not related to Prime Minister Benjamin Netanyahu's overall tax reform, which calls for corporate tax to be reduced from the current 24% to 18% by 2016 in order to encourage growth. The Finance Ministry objects to this.

The head of the National Economic Council, Hebrew University Prof. Eugene Kandel, praised the creation of the committee. The council advises the prime minister on economic matters.

"It's clear to everyone that the circumstances have changed since the law was first passed," he told TheMarker. "Therefore we must examine whether the tools used in the past suit the current situation, or whether we need new tools. The goals now include creating jobs, enabling corporate credit and increasing productivity, mainly in traditional industries."

The law's original goals included encouraging foreign investment and the construction of factories in peripheral areas in order to create stable jobs. These needs have been met.