"The finance minister is conducting targeted liquidations of the middle class, scoring a direct hit on the hearts of his voters. Why should a family which had a child in Israel and wants to buy a bigger home have to pay double taxes," said Israel Builders Association president Nissim Bublil in response to Minister of Finance Yair Lapid's budget proposal, which includes a number of new and higher real estate taxes.
Bublil continued, "Israelis already pay a purchase tax on the purchase of their first home. Why should a family which has to move because the parents have a new job have to pay a fine? The new taxes prove that the new government's only intent is to continue to enrich itself at the expense of homebuyers, who have become its ATM. No real action has been taken to help lower prices. The government isn't interested in lower prices, because it will profit more from rising prices."
Ayalon Group chief strategist Yaniv Pagot said, "This is a heavy burden which extraordinarily demonstrates the huge danger that the domestic housing and mortgage market poses to Israel's financial system. This figure clearly shows the heavy burden placed on Israel's people by the soaring home prices. The dream of a home is moving ever more distant, because VAT hike on new homes will be rolled over on to prices for second-hand homes. Based on experience, the VAT hike in June will cause a land rush in late May in order to save NIS 14,000-18,000 on the price of the home being bought. The purchase tax hike also makes the dream of a buying home more distant."
Ashdar Building Co. Ltd. (TASE:ASDR) CEO Arnon Friedman said, "Levying the purchase tax on people moving upmarket should not, on the face of it, affect young couples who have not yet bought their first home. But in practice, it is another blow that will hit them. Most young couples cannot buy a new apartment, and buy a second-hand apartment which is being sold by a family that is moving upmarket. Sometimes, people moving upmarket are also buying a second-hand home, and so on. The more taxes that people moving upmarket have to pay, the more they will scale back their plan to upgrade, with the final result that the supply of second-hand apartments for young couples will be smaller and prices will be higher."
Published by Globes [online], Israel business news - www.globes-online.com - on May 8, 2013
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