Israel-Gaza War, Taxes

Knesset Finance Committee approves raising VAT to 18% to cover wartime shortfall

The tax increase now goes to the Knesset for a second and third vote. Members of the committee, including on the coalition, criticized the move as too easy and harming the weakest members of society.

(Photo: Sutthiphong Chandaeng/Shutterstock)

Ynet reports that the Knesset Finance Committee approved an increase in the VAT rate from 17 to 18% today (Tuesday). It now goes to the Knesset for a final second and third vote, and will go into effect on January 1, 2025.

The tax increase is part of a series of efforts by the government to restrain the spike in government spending to pay for the war and handling of terror victims and civilian evacuees. It is expected to bring in about 7 billion NIS into the state treasury, if consumption does not go down.

Likud MK Eli Dellal said at committee that "we are undoubtedly in a period that needs (additional) taxation, but I expect that they not bring us the easy things. There are exemptions from tax payments that reach into the tens of billions - it could be that some of them are justified, but we need to take care of them."

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