Tourists to Israel may soon be paying taxes on hotel stays and related services, transport, car rentals and large purchases, from which they have been exempted for several years.
Finance Minister Yair Lapid intends to cancel the VAT tax exemption for tourists, a move projected to raise 300 million to 500 million shekels for state coffers annually, Haaretz reported on Thursday.
Previous attempts to eliminate the exemption failed, opponents arguing it would hurt tourism since Israel is already an expensive country for tourists, and such a tax would make it less attractive.
However, as the massive state deficit generates pressure to cut spending, the government is seeking ways to raise revenue so as to reduce planned cuts.
Finance Ministry officials have also had their eyes on the VAT exemption on fresh fruit and vegetables, but the difficulty of enforcement in the open-air markets is said to have stalled efforts on that front.
VAT is currently 17% and may go up to 18%.