Yair Lapid cancels income tax hike

The Finance Minister announced that the planned income tax hike of 1-2% from January 2014 has been cancelled.

Finance Minister Yair Lapid announced this evening that he will not implement the planned income tax hike.

Lapid was reportedly torn between either cancelling the planned rise in income tax or lowering VAT and chose the former. Senior Finance Ministry officials have reservations about the new measure but have been compelled to go along with it. Lapid added that he would cut the 2014 budget by NIS 3 billion to maintain stability.

Sources believe that Lapid did not consult with Prime Minister Benjamin Netanyahu on the matter and is unlikely to have sought his approval although he did tell the press conference that he had spoken to Netanyahu before announcing the tax cut.

Income tax was planned to rise by 1-2% from January. At this stage it is not yet known if the Finance Ministry also plans lowering VAT, which was raised from 17% to 18% earlier this year.

Lapid's decision comes after the government successfully collected NIS 3.7 billion from the trapped profits of the largest companies in Israel's economy. Rumors have abounded in recent weeks about imminent tax easements following higher than expected tax collection.

Lapid added that the plan not to cancel the tax hike will be brought to the Knesset for approval.

Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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