The Ministry of Finance will consent to betterment tax discounts for owners of three or more housing units selling their housing units following the imposition of the new tax, Knesset sources said today. One proposal in this context is reducing betterment tax to 20% for a limited period.
Participants in the recent discussions concerning the tax told "Globes" that representatives of the Ministry of Finance showed willingness to provide compensation for owners of three or more housing units, but Ministry of Finance sources said that no compromise on the tax itself was under consideration.
Reducing betterment tax is consistent with the new tax, because it gives housing owners an incentive to sell. Minister of Finance Moshe Kahlon is also promoting the opening of an investment track as an alternative for housing owners, but the team appointed to recommend the investment track, headed by Deputy Minister of Finance Yitzhak Cohen, has not yet submitted its recommendations.
The meeting scheduled for Thursday to discuss the tax on owners of three or more housing units was canceled just before the discussion in the Knesset Finance Committee, and has not yet been rescheduled.
Finance Committee chairman MK Moshe Gafni (United Torah Judaism) portrayed the postponement of the bill's discussion as a recess designed to facilitate understandings with the Ministry of Finance on other matters besides the tax on three or more housing units included in the Economic Arrangements Bill that have aroused great opposition in the Committee. These include the property tax fund, lowering the ceiling for the tax exemption on severance pay, and the planned tax cuts for high-tech companies.
The Finance Committee has already decided not to discuss the proposed ceiling for the tax exemption on severance pay unless the Ministry of Finance agrees to raise the exemption ceiling to NIS 50,000, instead of the NIS 37,500 ceiling stipulated in the Economic Arrangements Bill. The Ministry of Finance has not yet responded to this decision.
On the tax cuts for high-tech companies, committee members are supporting the proposal by Manufacturers Association of Israel president Shraga Brosh to extend the tax benefits to all industrial sectors, not just high tech, provided that the companies involved export their output.
On the property tax fund, work on the criteria for distributing the revenue in the fund to needy local authorities has not yet been completed. Gafni and Minister of the Development of the Negev and Galilee Aryeh Deri are currently handling the matter.
Budget deficit target approved
The Finance Committee today approved raising the 2017-2018 deficit target to 2.9% of GDP, in accordance with the Ministry of Finance's proposal in the Economic Arrangements Bill.
The Committee also approved the "Savings for Every Child" plan, in which children are expected to save NIS 11,000-41,000, depending on the interest rate and how much their parents add. The National Insurance Institute is about to send 1.4 million letters to parents in Israel, who will have to decide whether the money will be deposited in the bank or in provident funds. If the parents do not give notice of their choice by June 1, the money will be deposited in a bank for children aged 15 or higher, and in a provident fund for all other eligible children.
Published by Globes [online], Israel business news - www.globes-online.com - on December 4, 2016
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