07/26/2012 15:01–Bank of Israel Governor Stanley Fischer on Thursday backed Prime Minister Binyamin Netanyahu’s plan to raise VAT by 1 percent, reversing his criticism of the government’s economic policy in June.
“Last month I was somewhat critical about the government’s fiscal policy, but what I have seen in the past two days is very serious progress and very responsible conduct by the economic decision makers,” Fischer said after meeting with Netanyahu and Finance Minister Yuval Steinitz to discuss the 2013 state budget.
“I hope that within no more than a few days we will see a package that will really change the Israeli economic situation and allow us to continue to grow at a very respectable rate,” he said.
Earlier this week, Netanyahu and Steinitz announced they plan to ask the cabinet to vote Monday on proposals to immediately increase VAT from 16% to 17% – the highest level since 2005 – and to introduce an across-the-board NIS 700 million cut to government ministries. These proposals are likely pass because not one of the 15 Likud ministers has announced opposition.
Purchase tax on cigarettes, cigars and beer rose Wednesday at midnight in a move expected to increase this year’s state revenues by about NIS 1 billion. The cigarette purchase tax rose from 260.6% to 278.6%, adding NIS 2 to NIS 3 to the price of a pack. The beer purchase tax rose from NIS 2.18 to NIS 4.19 per liter…Read More>>