Israeli Cabinet Weighs Committee Proposals on Taxes, Prices

Israel’s Cabinet is discussing the recommendations of a government panel that proposed raising taxes on companies and on individuals who earn more than about $130,000 a year and may vote as early as today.

The panel, appointed by Prime Minister Benjamin Netanyahu in response to protests over the cost of living, proposed that corporate taxes be increased to 25 percent next year and 26 percent in 2013 from 24 percent this year. It said the top rate of personal income tax should be raised to 48 percent, and that the country must increase its stock of affordable housing and open its markets to more imports.

The recommendations “will allow us to do necessary repairs, but in a responsible manner,” Netanyahu told the Cabinet in Jerusalem today, in remarks broadcast on Army Radio.

Netanyahu tapped the panel, led by economist Manuel Trajtenberg, to come up with proposals after mass street protests across the country calling for lower prices and more affordable housing.

The proposed tax increases would raise 30 billion shekels ($8 billion) over five years, and the money should mostly be spent on education, the panel said when it presented its recommendations on Sept. 26. It also proposed cuts to the defense budget.

The Trajtenberg report has been criticized by ministers from two parties in Netanyahu’s Likud-led ruling coalition, Foreign Minister Avigdor Liberman’s Yisrael Beitenu and the religious Shas faction.

‘Real Solutions’

“I don’t see here any real solutions to the problem of poverty in Israel,” Minister of Tourism Stas Misezhnikov of Yisrael Beitenu told Army Radio before the Cabinet meeting. “This won’t solve the housing problem, won’t solve the problem of indirect taxes and won’t bring funds flowing into the Education Ministry.”

Misezhnikov also said ministers should be given more time to examine the report before possibly voting on it today.

----With assistance from Gwen Ackerman in Jerusalem and Jonathan Ferziger in Tel Aviv. Editors: Louis Meixler, Heather Langan.

To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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