More Tax Reforms Ahead In Israel

Israel's economy is forecast to grow 4% in 2005, and the government's budget deficit is expected to be a relatively small 3.4% of gross domestic product for the year. So Finance Minister Benjamin Netanyahu is preparing for another round of tax cuts. He is looking to reduce the corporate tax rate to 30%, from 34%; lower value-added tax by a percentage point, to 16%; and cancel a 2.5% tax on home sales. He is also considering a massive sell-off of state-owned land.

A Finance Ministry official says the finalized plan would be announced within weeks. Initial reports on the tax package surfaced on May 1, the same day that former Citigroup (C ) Vice-Chairman Stanley Fischer took over as governor of the Bank of Israel. The news of the planned reforms and the swearing-in of the new governor sent the Tel Aviv stock market's main index to a new record high.

Edited by Rose Brady

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