The cabinet during its weekly meeting on Sunday, 29 Teves, approved Finance Minister Moshe Kahlon’s plan to eliminate 17% value added tax (VAT) on public transportation. The force behind the move was Shas leader Minister Aryeh Deri. As a result of the decision to permit a reduction in fares, the national government will have to subsidize the transportation cost and pay out NIS 650 million annually to transportation companies.
The new law also contains a stipulation that prevents a fare hike based on an increase in VAT rates. Transportation rates are decided upon by the Finance and Transportation Ministers.
(YWN – Israel Desk, Jerusalem)
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One Response
Your report is inaccurate. The VAT is specifically not being eliminated. The Ministry of Finance opposed removing the VAT, as they claimed that this would lead to other services becoming VAT exempt in the future.
What did happen is that the government has provided a subsidy (as if the VAT was eliminated), to reduce the prices. This means that if a vat vendor uses public transportation for business use then they can claim the VAT back & in effect receive a double discount.
Uri Sher, CPA (Isr.)