Tax Reform to Benefit Workers, Hurt Gamblers

The Israel government hopes to attract more foreign companies to Israel with the implementation of a reduction of 2 percent in corporate tax rates. Currently at 25 percent, the Finance Ministry has authorized the reduction of the rate to 23 percent in two stages, with the first reduction of 1 percent taking effect at the beginning of next year, and the second in January 2018.

Corporations are not the only ones who will benefit from changes in the tax structure. The tax rate for middle-class income earners will also fall. Individuals earning between NIS 107,041 and NIS 171,840 per year (between NIS 8,921 and NIS 14,320 per month) will see income taxes fall by 1 percent, from a current rate of 21 percent of income before tax credit deductions to 20 percent. Higher income earners, of between NIS 19,801 and NIS 41,410 per month, will also pay 1 percent less, with their rate falling from 35 percent to 34 percent.

Those reductions mean the state will be bringing in less cash; the corporate tax reduction alone will cut state tax revenue by NIS 1.8 billion. One way that money will be made up is by increasing taxes paid by winners of state lotteries. Beginning in January, winners of Lotto, Mifal Hapayis games, and other state-sponsored games of chance who get more than NIS 50,000 in prizes will pay 35 percent of their winnings in taxes, instead of 30 percent. Winners of prizes up to NIS 50,000 will see no changes in their taxes.