Lynn welcome cuts in purchase tax

President of the Israeli Federation of Chambers of Commerce said that the decision was in the right direction which will give another boost to economic growth
 
Following the announcement made last week by the government regarding the cancellation of purchase tax on some 100 consumer items, including refrigerators and air conditioners, the president of the Israeli Federation of Chambers of Commerce said that the decision was in the right direction which “will give another boost to economic growth and increase the purchasing power in the domestic market”.
 
Lynn added that the measure was also very important socially because it will make products available for low income earners.” The move is expected to cost the government an estimated $100m in revenue annually. The Chambers of Commerce estimates that the cut in purchase tax will help support continuing 5% growth a year.
 
Included among the products that consumers will no longer have to pay purchase taxes of between 2% and 10% are electrical items such as refrigerators, washing machines, air-conditioning units and batteries, as well as cosmetics.
 
Lynn noted, however, that the cut in purchase tax was not enough and that the government should cut income taxes on the third and fourth tax brackets.
 
Such a move will prevent blatant injustice towards broad swathes of the population who earn gross salaries of between NIS 4,170 and NIS 11,140 a month”.
 
Lynn proposes that, when the income tax reform is completed in 2010, the direct tax rate for the third tax bracket (NIS 7,383) should be no more than 20%, and the tax rate for the fourth tax bracket should be no more than 25%. Income tax reduction will create the incentive for more people to go to work, said Lynn.