2024-07-04 04:05:12
Israel’s Finance Ministry has released data indicating that tax increases planned for early 2025 will hit the poorest first.
This was reported by news portal N12.
In January next year, the VAT (value added tax) is planned to increase from the current 17% to 18%. However, the Finance Ministry is also considering raising the VAT to 19% as part of the 2025 budget. Also this week, the Finance Ministry’s Chief Economist’s Office published a document reflecting the share of indirect taxes from Israelis’ income in various deciles.
According to the document, the bottom decile, the 10% of Israelis with the lowest incomes, pays 42% of their income in indirect taxes. In the next decile, this share drops to 26%, and in the top decile it is only 9%. However, Israelis with the highest incomes pay significant amounts in direct taxes.
As for VAT, the poorest Israelis in the bottom decile spend 28% of their income on it. In the next decile, this share drops to 18%. The document shows that for the bottom six deciles, VAT is the most significant tax among all other types of taxes.
Earlier, Cursor reported that the Finance Ministry was planning to legislate a home purchase tax for investors at 8% in order to contain pressure from interested parties demanding lower tax rates. However, despite this intention, it is questionable whether the administration will be able to convince the public, especially given that statistics show that high taxes do not always reduce home prices.
2024-07-04 04:05:12