Finance Committee of the Knesset has approved an increase in Israel's Value Added Tax

Posted on Feb 22, 2024 by Ifi Reporter

In a move to address the significant deficit in the state budget, the Finance Committee of the Knesset has approved an increase in Israel's Value Added Tax (VAT) rate from 17% to 18%, effective January 1, 2025. This decision marks the first adjustment to the VAT rate since 2015 when it was reduced from 18% to 17% under the initiative of the then Minister of Finance, Moshe Kahlon, aimed at stimulating economic activity and growth.

The decision, made despite Prime Ministerial assurances just two months prior that there would be no tax hikes, is anticipated to generate an additional income of NIS 7.2 billion. However, concerns have been raised regarding the potential impact on household finances, particularly amidst ongoing economic challenges exacerbated by recent conflicts.

Critics within the Knesset, including members from the coalition, have voiced opposition to the VAT increase, citing its potential adverse effects on already strained households. MK Hanoch Malvitziki questioned the prioritization of taxation over other budgetary considerations, highlighting issues such as state-funded pensions and military expenditures. Similarly, MK Hamed Amar expressed concern over the burden on vulnerable segments of society, particularly in terms of increased costs for essential goods like medicine.

Uriel Lin, president of the Union of Chambers of Commerce, also criticized the decision, emphasizing the current economic crisis and the potential negative repercussions on private consumption. Lin highlighted the likelihood of price increases across various sectors, including utilities, healthcare, and housing, further impacting the financial well-being of citizens.

Despite opposition, the Finance Committee, chaired by MK Moshe Gafni, ratified the government's proposal, aligning with the balancing plan for 2024. The impending VAT adjustment underscores ongoing efforts to address fiscal challenges and stabilize the state budget, albeit amidst dissent and concerns regarding its socioeconomic ramifications.

The VAT increase will see transactions and imports in Israel subject to an 18% tax rate, with exemptions for certain goods and services remaining intact for the time being. As the decision moves forward for final approval, it sparks debate over the balance between fiscal responsibility and the welfare of Israeli citizens, particularly those most vulnerable to economic shocks.


Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum


House of Representatives voted in favor of the military aid package to Israel

Apr 20, 2024 by Ifi Reporter

The American House of Representatives voted this evening (Saturday) in favor of transferring the military aid package to Israel, Ukraine and Taiwan, worth 95 billion dollars. Israel's share of the aid package is expected to reach $14 billion, which will be used, among other things, to renew... Continue reading →

United Airlines Cancels Flights to Israel Until May 2 Amid Security Concerns

Apr 19, 2024 by Ifi Reporter

In response to ongoing security concerns, United Airlines has announced the cancellation of its daily flight from Newark to Tel Aviv until May 2. The decision reflects the airline's commitment to prioritizing the safety of its passengers and staff amidst the uncertain security situation.... Continue reading →

Court Orders Release of Hebrew University Lecturer Suspected of Incitement

Apr 19, 2024 by Ifi Reporter

 Professor Nadira Shalhoub-Kiborkian, a lecturer at Hebrew University, has been ordered to be released by the court. Shalhoub-Kiborkian was arrested on suspicion of incitement following her remarks regarding the Hamas attack on October 7 and the subsequent conflict. The Jerusalem... Continue reading →


No testimonials. Click here to add your testimonials.