Tax Cuts for 40,000 Israelis

Treasury officials said today that about 40,000 Israelis will be removed from the income tax rolls as a result of changes scheduled next year in Israel’s income tax law. They said the revisions, planned to take effect as early as next April, will benefit hundreds of the sands of taxpayers by increasing their take-home pay by smaller tax deductions.

The officials said the main beneficiaries would be low-income Israelis who now pay a minimum tax and wage earners in the IL 1500-2000 category in annual earnings. Under the revisions, a worker with two children will start paying taxes on monthly earnings over IL 574 instead of IL 483 monthly as at present. A worker with four children would not pay taxes unless his earnings were at least IL 805 a month. He currently pays no taxes if his income is less than IL 686 a month.

Finance Ministry economists said the changes would cost IL 400 million in revenue annually but that revenue from remaining taxpayers would grow as the tax base was broadened and collection of overdue tax payments stepped up. Finance Minister Pinhas Sapir reportedly strongly supports the revisions because they will ease the burden on low-income workers and encourage middle-income earners to work overtime, a practice which they feel is not worth the effort under the present tax structure.

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