Ministry of Finance director general Haim Shani explained the ministry's basis for cutting the value added tax (VAT) this coming Friday. Minister of Finance Yuval Steinitz said this morning that the VAT will be cut from 16.5% to 16% on January 1st, earlier than the planned mid-year cut in the VAT.
Shani told IDF Radio (Galei Zahal), "We are cutting a half percent with the goal of cutting VAT in a measured and set way. We saw that in comparison with the government's original plans, which were authorized by the Knesset only a half a year ago, there has been an improvement in Israel's economic situation. The business results are better than we thought - which led us to decide to carry out the measure."
Shani claims that the current cut will aid weaker economic segments of the population. "They will benefit from the move because they are the ones who spend most of their income. In addition, we plan in 2010 to increase the allocation, something that will speak well to those classes."
Shani also referred to the economy's economic growth outlook. "There is still uncertainty about next year and about the strength of the recovery, but apparently the growth in 2009 will be better than we expected. Along with the question marks, we see an exit from the recession at a quick pace, quicker than we previously thought."
Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2009
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