Treasury plans to lower taxes

TEL AVIV - Treasury officials are currently working to formulate a new economic plan premised on the reduction of a wide variety of taxes. However, the plan is not expected to be implemented before 2006, because at this time the government does not have enough money to fund the ambitious program. However, senior officials are considering what they call a "symbolic tax reduction" in the coming weeks. "Finance Minister (Benjamin) Netanyahu wants each tax reduction to boost economic growth," a senior Treasury official said. Another proposal under consideration is an income tax reduction aimed at increasing the net salaries of those earning up to NIS 10,000 (about USD 2,250) a month. On several recent occasions, Netanyahu said that "the more taxes we cut, the extra funds that remain in citizens' pockets would be used for consumption, economic activity will grow, jobs will be added, unemployment would drop, and growth will increase." Other senior Treasury officials are known as enthusiastic supporters of Netanyahu's views. Negative income tax considered Among the measures being considered is the reduction of business taxes paid by companies from 34 to 30 percent. The government has already decided on a gradual six-year reduction, but now officials are looking into cutting the tax rate at once. If the move is adopted, it is expected to cost the government about NIS 1.6 billion (approximately USD 360 million.) Other measures under consideration are the reduction of the value added tax rate from 17 to 16 percent, and the cancellation of the tax imposed on home sales, which currently stands at about 2.5 percent. Another possibility is the introduction of a negative income tax, meaning that working families that do not meet a minimum income standard would be compensated by the government. However, the extensive changes that such plan would require mean it is unlikely to be implemented in the short run.

Treasury plans to lower taxes

Among measures considered by Finance Ministry, reduction of value added tax, annulment of taxes on home sales