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New Travel Tax for Israelis Passes First Reading in the Knesset

A new tax bill that will require Israelis to pay a $50 levy when they travel abroad, passed its first reading in the Knesset last week by a vote of 44-34. The travel tax, originally instituted by a Labor-led government, was rescinded by the Likud when it first took office in 1977. It is being restored now under heavy pressure from the Tami and Agudat Israel parties, two of Likud’s coalition partners.

The new tax is expected to yield more than 3 billion Shekels a year, according to Israeli economists. Tami expects part of this revenue to be used to increase welfare subsidies for large families. The Aguda Israel wants larger government subsidies for its yeshiva students to come out of the new tax, as promised by Likud.

The travel tax is an unpopular measure, considering the large numbers of Israelis who vacation abroad each year. It is opposed by the Labor Alignment. Labor Party chairman Shimon Peres conceded that it was a mistake to impose the tax when Labor was in power. Government spokesmen note that the 15 percent value-added tax (VAT) is not applied to travel tickets. Oppositions MKs reply that the $50 levy on a $300 ticket to a nearby Mediterranean resort amounts to more than 15 percent.

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