Value-Added Tax (VAT) reduced by 0.5% to 16%

The Treasury believes the move will "encourage market growth and the lower socioeconomic tier's buying power
 
Finance Minister Yuval Steinitz has decided to reduce value-added tax (VAT) by half a percentage point at the beginning of 2010.
 
The new rate will be 16%. The new rate went into effect on Friday, January 1.
 
The Treasury believes the move will "encourage market growth and the lower socioeconomic tier's buying power, which, together with the increase in social security benefits, will contribute to bridging (financial) gaps, and curb inflationary pressures”.
 
The Finance Ministry said state revenues would decrease by NIS 1.8 billion as a result of the move. It stated that this was made possible by the fact that Israel was not very severely impacted by the recent international economic crisis, and has been witnessing economic growth since the passage of the bi-annual budget and economic plan.
 
The ministry stressed that the decision was made with Prime Minister Benjamin Netanyahu's full support.