Taxes on renting an apartment and watching Netflix: After the stormy passage of the 2023 budget, the Ministry of Finance is currently formulating the 2024 budget, which will include difficult decrees that will harm the middle class, despite the opposition of Finance Minister Bezalel Smotrich – and despite the war.
Infographic: The decrees that could harm civilians, Photo: GettyImages
These include raising taxes, income tax on rent, freezing child credit points, freezing the public transportation reform, tax on orders from shopping sites abroad, the Netflix tax, and canceling benefits for those who complete an academic degree.
A few steps
A presentation prepared by the Ministry of Finance and obtained by Israel Hayom lists several steps. Some are necessary, such as cuts in government ministries' spending, while others are liable to significantly harm the weaker sectors. It is believed that this is a preliminary plan that is expected to undergo changes in the coming weeks. Such a plan can cost the average family several hundred shekels an additional month.
Voting on the State Budget // Knesset Channel
The Ministry of Finance, according to the presentation, claims that "convergence measures are needed to reduce the structural deficit. Implementation of convergence measures that have a positive impact on the economy, reduction in government ministries, and more."
The Ministry of Finance rightly demands streamlining the structure of the government and reducing duplication, focusing expenditures, and reducing salary and pension expenses. In addition, almost as usual, finance officials are asking for across-the-board cuts in government spending.
However, apart from these items, the Ministry of Finance is planning other drastic measures. For example, raising one percent in income tax and raising one percent in VAT. According to finance officials, these two items together will bring NIS 11 billion into the state coffers.
Another particularly painful clause is the cancellation of the tax exemption on rent.
Another particularly painful clause is the cancellation of the tax exemption on rent, Photo: Joshua Yosef,
Today, if the total monthly rental income does not exceed NIS 5,400, the landlord receives a full tax exemption. The concern is that canceling the exemption will cause landlords to roll over the tax on tenants – which could lead to an increase in the rental market as a whole.
Shopping sites at stake
The Ministry of Finance does not intend to be satisfied with this. In an attempt to keep more money in the state coffers – they raise another decree related to purchasing from shopping sites.
Another decree related to purchasing from shopping sites, photo: Getty Images
To date, purchases on sites such as Ali Express and Amazon for $75 are tax-free. The Ministry of Finance wants to cancel the exemption. Total cost: about NIS 400 million.
Another clause that the Ministry of Finance is seeking to promote, and has already tried to promote in the past, has been dubbed the "Netflix tax." In the presentation, it is presented as "obligation to pay value added tax on the import of digital services." This is a tax on streaming services. In total, it will yield an additional NIS 100 million.
"Netflix tax", photo: Reuters
And it doesn't end here. The Ministry of Finance wants to freeze plans planned by government ministers, such as adding new credit points for parents of children up to age 18, as well as freezing Miri Regev's reform in public transportation, which was supposed to provide a 50% discount on public transportation prices in the periphery.
"Easiest to bully"
Another item in the Finance Plan that may harm students is the cancellation of tax benefits for those who complete an academic degree. Today, students who complete a bachelor's degree receive a credit point for one year.
Finance Ministry sources explain that they are bringing the range of options to the minister's decision. Smotrich's office said: "The Budget Department has not yet presented its proposals to the Minister of Finance in an orderly manner, and so far the Minister has learned about them only from what is leaked to the media.
The finance minister strongly opposes raising taxes. Repeal of the reform, photo: Yehoshua Yosef
"In any case, the finance minister is vehemently opposed to raising taxes that would cause severe economic damage to the Israeli public and could lead to a recession. The Israeli public is bravely coping with the war and is showing resilience and determination, but it does not deserve to receive blows and economic decrees now.
"The 2024 budget will be characterized by responsibility and restraint, but not harm to the weaker sectors and the middle class. For too many years, it's easiest to bully these layers and not touch all kinds of privileged groups. Not anymore. Period."
Wrong? We'll fix it! If you find a mistake in the article, please share with us