Prime Minister Binyamin Netanyahu decided to cut in half the payroll tax increase scheduled for January 1, from 0.5% to 0.25%, Globes reported.
Citing a desire to ease the burden on employers, Netanyahu said that the tax will go up to 6.75% instead of the previously announced 7%.
The moving force behind the decision is Prime Minister’s Office Director General Harel Locker, charged with handling economic affairs. Following the decision of Finance Minister Yair Lapid to cancel the income tax hike, Locker has advocated the an easement on payroll tax and companies tax, to encourage economic activity by raising investment in the economy while doing away with taxes that “harm employment.”
Manufacturers Association director general Amir Hayek also welcomed the measure and said that it was a move in the right direction. He said, “It shows that the prime minister and minister of finance care about the economy and industry.”
However, it was noted that the lower hike will leave a NIS 500 million hole in the budget that will have to be filled in some other way.