Finance Minister: Stamp tax to be abolished from 1st January 2006

Finance Minister Ehud Olmert said last week that the much opposed stamp tax would be abolished from January 1, 2006, two years ahead of schedule.
 
Assuming the Knesset Finance Committee approves the decree, documents signed from January 1, 2006 will not be taxed.
 
In a ministerial press release, Olmert noted that the Stamp Tax Law dates back to the days of the British Mandate, which, in order to raise funds, taxed documents, not transactions. Olmert added that the stamp tax is a fiscal tax and not an economic tax. It is charged solely in order to increase government revenue, and with no correlation to the outcome of the actual transaction.
 
Following the announcement, Ministry officials said that in 2004 the government collected NIS 885 million through stamp tax, above the NIS 852 million collected in 2003. In 2005,however, the government is expected to raise only NIS 750 million.
 
Originally, the Finance Ministry had intended to phase out stamp tax gradually until January 1, 2008. However due to public complaints, the finance minister ordered the Income Tax Authority to re- examine whether it could be terminated earlier.
 
Olmert also noted that abolishing the tax at once rather than in stages, has several economic advantages to the economy. It not only reduces the tax burden but also reduces government involvement in business.