The Israeli Ministry of Finance is currently mulling a series of new tax cut proposals, including the bringing forward of an already planned corporate tax cut, in order to help stimulate the country's economy.
In a report to be submitted to Finance Minister Benjamin Netanyahu, a senior Treasury team including Finance Ministry director general Joseph Bachar, Finance Ministry budgets director Kobi Haber and Israel Tax Authority director general Eitan Rub has recommended that a cut in corporate tax to 30%, planned for 2007, should be brought forward.
The Treasury panel is also calling for additional cuts in real estate taxes, a cut in VAT by 1% to 16%, and the equalisation of tax rates for the stock exchange, capital market, capital gains, and real estate.
Changes to capital gains rates will affect all real gains from the sale of assets, including real estate, non-real estate assets that are held by an individual for personal use, and business inventories, among other areas.
However, proposals for a negative income tax rate to help low wage earners are thought unlikely to be adopted. The panel have also rejected the possible introduction of tax relief on mortgage interest, deeming such a move as too regressive.
The reforms are thought likely to be phased in over a number of years.
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