Israeli Finance Minister Benjamin Netanyahu's tax reforms, which include tax cuts on both corporate and individual income, have cleared their first legislative hurdle in the Knesset after a vote on Monday.
Under the proposals contained in Netanyahu's tax package, the top rate of income tax will be cut to 42% from 49% by 2010, and corporate tax will be reduced to 25% from 34% over the same time scale.
Value added tax will also be cut by 0.5% to 16.5% in September 2005, and purchase tax on apartments up to NIS550,000 (US$121,500) in value will be withdrawn.
Other measures included in the NIS12 billion (US$2.65 billion) package included a 20% flat capital income tax and a new tax on foreign-registered trusts.
According to Netanyahu, the reforms will also redistribute "billions" to low income earners and will cut National Insurance Institute contributions for those below the income tax threshold.
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