The Knesset has advanced a bill to lower the VAT rate from 18% to 17%, framed as a measure to combat the high cost of living. The Finance Ministry and Tax Authority oppose the move, estimating it would cost 8.5 billion shekels annually with minimal benefit to the average consumer.
The Knesset is advancing a bill to reduce Israel's value-added tax (VAT) from 18% to 17%, according to a legislative proposal promoted by lawmakers as a tool to ease the cost of living. The Finance Ministry and the Israel Tax Authority oppose the measure, arguing in internal discussions that it would cost the state treasury approximately 8.5 billion shekels per year in lost revenue while providing negligible relief to individual consumers. The proposal marks a new round in the ongoing policy debate over fiscal measures to address inflation and household expenses. As The Zioneer reported earlier this month, the Treasury has previously opposed broad tax-benefit expansions, citing budget strain and limited effectiveness. The bill's legislative path remains uncertain given the government's fiscal constraints and rising national debt.
2 developments
- DevelopingEconomic commentator argues direct distribution would be more efficient than a VAT cut
- DevelopingKnesset panel presses Finance Ministry over food prices that ignored dollar's fall
- StrongAnnual inflation steadies at 1.9% after governor signals rate-cut easing
- DevelopingLikud advancing bill to grant tax benefits to Be'er Sheva residents at 600 million shekels annual cost
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