The Knesset Finance Committee today cancelled the NIS 0.40 per liter hike in the fuel excise, scheduled to come into effect at the beginning of 2012, but also cancelled the income tax cut. As part of the biennial budget for 2011-12, the basic income tax rate was due to be cut from 24% to 23%, but because of the cancellation of the excise hike, the government decided behind closed doors to cancel the income tax cut.
During the Finance Committee discussion, the Ministry of Finance said that it was planning another NIS 800 million across-the-board cut in all ministries' budgets, in order to compensate for the loss of tax revenues resulting from the cancellation of the excise hike in 2012. Arguments erupted, with some Finance Committee members furious at the ministry's plan for another across-the-board budget cut.
"It turns out, according to OECD figures, that we're in last place in direct taxes (company tax), but we're in a very high place in indirect taxes. The committee believes that this policy has considerable economic logic, but no social logic. I understand the economic logic - cutting taxes encourages the opening of factories, etc. - but I have the feeling that we've gone too far with this process. It is causing people to suffer," said Finance Committee chairman MK Moshe Gafni (United Torah Judaism), during today's special meeting to discuss skyrocketing fuel prices, which turned into a general discussion on tax policy.
Gafni said that he intended to discuss postponing a government bill on income tax reform, which includes cutting direct taxes on the wealthy, so that it will not come into effect in 2011 or 2012. In effect, this means cancelling the income tax cut.
No comments:
Post a Comment