9 July 12 17:10–”We intend to examine the effect of the capital gains tax on turnover,” Ministry of Financedirector general Doron Cohen told a Tel Aviv Stock Exchange (TASE) conference today, referring to the 5% capital gains tax hike which came into effect in January, and the plunge in trading volumes on the TASE. His remarks aroused the audience, who hope that it will lead to a tax cut.
TASE turnover has been falling steadily for over a year. The average daily turnover fell 15% from NIS 2 million in 2010 to NIS 1.7 million in 2011, and fallen further to NIS 1.1 million in the first half of 2012.
Top Ministry of Finance officials confirm that the ministry is planning a “kind of study” to examine the tax-turnover link, but that there are no plans to reduce the capital gains tax. “Taxes are rising, not falling now,” said one official.
Despite the Ministry of Finance’s attempt to pour cold water on hopes for a tax cut, the study will obviously not be merely academic, but will try to find a causal link between the capital gains tax hike and lower TASE trading volumes. Ministry officials stress, however, that the tax hike, which was part of the Trajtenberg Committee recommendations, will not be rescinded, because it helps finance free education for children aged 3-4, which is now coming into effect…Read More>>