There is a growing consensus that Finance Minister (Yesh Atid) Yair Lapid is not exactly ‘in the know’ regarding the complexities of preparing a state budget. The latest group to voice an opinion against Lapid is the hotel operators, who reacted harshly to rumors of imposing value added tax to visitors in Israel’s hotels. That tax at present would add 17% to a tourist’s hotel bill. Lapid hopes to increase VAT by 1% in the state budget, bringing it to 18%. That means an 18% tax would be added to all hotel bills.
The hoteliers politely accuse Lapid of failing to grasp the significance of a brisk tourism industry, and just how many jobs are generated around this lucrative industry, not to mention collateral profits from tourists who frequent shops, restaurants, spas and other venues where they spend their vacation dollars.
In addition, the hoteliers warn that adding VAT tax to hotel visits for foreigners would result in a sharp and immediate drop in tourism, which would result in the loss of thousands of jobs. The experts explain to Lapid that while he believes the VAT would generate 500 million NIS annually, after taking the drop in tourism into account, the actual net gain would be realistically be more in the area of 200 million NIS – adding this is without taking the loss of jobs and tourist revenue into account.
The hoteliers and tourism officials warn the minister that imposing VAT on visitors in hotels would deliver a fatal blow to the growing tourism industry, an industry that is vital to the nation’s economy.
(YWN – Israel Desk, Jerusalem)
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2 Responses
When I go away either on vacation or on business and stay in a hotel I have to pay the local taxes. Why should it be any different in Israel? Are these hotel owners saying that the only thing that brings people to Israel is 17% off their hotel bills? If the hotel owners really wanted to boost the tourist industry they would lower their outrageously high prices, refurbish their tatty properties and teach their arrogant staff what service means.
Easy for you to say, avreimi. I do agree with the point you make about refurbishing – perhaps lowering rates, but do the math – this is not done easily as things are now, try to imagine such improvements once the VAT would be added. Hence,I tend to side with the opinion of the Hotel owners. True, tourists ought to expect some sort of tax added to what they pay. This would theoretically extend to car rentals, tours, and just everything they purchase. But, it is a big deterrent to put the full Israeli VAT in place. Perhaps Lapid is aiming high and is actually ready to settle for a compromise rate special for tourists (Shuk-bargaining style)? Nothing surprises anymore, though.
Kudos, however, to the writer of this piece. Very skillfully done in every way – how refreshing. YWN – give this writer a raise!!!