Israeli taxpayers were no doubt relieved but also exasperated by Finance Minister Yair Lapid’s turnabout Monday night, as he announced that income taxes will not be going up in 2014 after all.
“Eight months after my appointment to this government is a good time to assess the situation anew, and I would like to announce that we have decided to cancel the increase in income tax that was meant to to go into effect this coming January first. We will go to the government and the Knesset to bring down income tax,” he said at a press conference.
“This is a decision that was taken carefully, after thorough discussions, and this decision will help us confront the fact that we still have great challenges in raising the growth rate,” he said.
A shrinking deficit has led to speculation about tax relief, but Finance Ministry officials have been playing down such a prospect, saying a few days ago that no decision had been made on it.
The raise in income tax from between one to two percent, depending on tax bracket, was one of several of Lapid’s austerity measures, including a one percent increase in Value Added Tax, added taxes on alcohol and cigarettes, and higher corporate taxes.
Shas chairman Arye Deri blasted Lapid for mocking the citizens of Israel. “The state of Israel and its citizens are not tools for manipulations and games,” Deri said. “What was taken from the citizens of Israel must be returned.”
Likud MK Gila Gamliel, who heads the coalition delegation in the Knesset Finance Committee, said, “It is unfortunate that it took so long for Lapid to internalize his mistake, and meanwhile the public had to carry on with such frustration.”
MK Itzik Shmuly (Labor) said that everyone is happy to pay lower taxes, but the spectacle of a Finance Minister who keeps changing his mind should worry Israelis.
“Just four months ago, the same Finance Minister passed a cruel budget that will hurt the workers and the poor,” he said. “Now it looks like he scared us for nothing. Lapid wants to be Robin Hood but he looks bad in this story. Either he did not understand things before, or he purposely planned everything in advance and if so, he is a cynical politician.”