Israel will sharply reduce taxes paid on consumer goods in response to the country's healthy fiscal situation and a need to accelerate the economic upturn, Finance Minister Avraham Shohat said Monday.
From midnight (2100 GMT) Monday, special import taxes will be removed entirely from a list of 320 products, including video cameras and household electrical appliances.
At the same time, the tax will be reduced from 85 percent to 45 percent of the purchase price on a list of 310 other goods, among them televisions and refrigerators.
The more than $300 million in revenues foregone as a result of these measures will be partly offset by an expected rise in sales of goods subject to value-added tax, which is 18 percent in Israel, the ministry said.
The tax-cut comes amid prospects of early elections, after the government of Prime Minister Ehud Barak lost its parliamentary majority last month due to defections over Barak's participation in the Camp David peace summit.
According to a report issued by Israel's central bank at the beginning of August, Israel's economy will grow by more than originally anticipated this year and unemployment will continue to decline.
Based on structural reforms carried out, the report said economic growth should be sustainable, the report said, highlighting the development of the high technology sector, rapid growth in exports, government and household spending, a reduction in the budget deficit and a benign inflation picture.
Unemployment fell to 8.6 percent in the first quarter of 2000 from 8.9 percent in the last three months of 1999, and the report said that trend should continue.
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
