Knesset Approves 1 Percent Increase in Value Added Tax

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knessetThe Knesset on Wednesday, 20 Sivan 5773, in a stormy session put its final stamp of approval on a 1% increase in VAT (Value Added Tax), which on motzei Shabbos will increase to 18%. The vote passed by a 46-39 majority. Finance Minister Yair Lapid was not present, as he was in Paris. Other cabinet ministers voted by absenting themselves, as they too were opposed to the move but did not wish to break coalition discipline by opposing the move, hence, they decided not to take part in the vote.

Despite his absence, Lapid came under fire. MK (Likud) Miri Regev asked “How can Lapid look voters in the eye? He spits in the face of Yesh Lapid voters!”

MK (Bayit Yehudi) Nissim Slomiansky, who chairs the Knesset Finance Committee added “I am not a fan of VAT but there is the realization of the national debt of 40 billion NIS and at times, there are no alternatives.” He promised the finance committee will sit “forty days and nights” in the search of alternatives to the current fiscal decrees, aware some of them are quite harsh for many citizens. He is confident that some of the clauses that many find objectionable will be eliminated.

“A tax of cowards” is the term used by opposition leader MK (Labor) Shelly Yacimovich, who lashed out at the government asking “How can you face us without being embarrassed? Who are you levying this tax on, on the very same public that does not have lobbyists to protect its interests! They do not have attorneys to accompany them to Knesset to plead their case. They are not connected to senior treasury officials who can hear their voices. They have nothing! They remain silent. These are the people you target, putting your hands in their pocket by levying additional taxes. This is unjustifiable, immoral and not good economics.”

She added that the fact the finance minister was vacationing in France makes sense, since he signed the order to increase VAT which impacts the poorest segments of society the hardest.

(YWN-ISRAEL adds that Lapid is combining his official participation in the OECD (Organization for Economic Cooperation and Development) conference with a short vacation.)

The experts predict the increase in VAT will generate 7 million NIS by the end of 2014 in additional revenue.

(YWN – Israel Desk, Jerusalem)