Budget advances with tourists’ VAT exemption intact

JERUSALEM (JTA) — Tourists will maintain their exemption from the value-added tax in the 2013-2014 budget passed by the Israeli Cabinet.

The 388-billion-shekel ($106.7-billion) budget passed late Monday night includes a 2-percent, across-the-board reduction in spending this year, excluding the defense and welfare and social services ministries.

Next year’s budget of 408 billion shekels ($112.2 billion) features a 3-percent reduction with the same exclusions.

Minister of Environmental Protection Amir Peretz of the Hatnua party was the lone dissenter among the 22 Cabinet members in voting for the spending plan, which advances to the full Knesset for approval.

In the original budget proposal, Finance Minister Yair Lapid had aimed to charge tourists with the country’s value-added tax. Tourists have been exempt from paying the VAT for hotels, travel services and manufactured products.

Tourism Minister Uzi Landau praised the move to maintain the exemption as a “responsible decision not only for the 200,000 people working in the tourism industry, but for the tourism industry and economy as a whole,” reported The Jerusalem Post.

The Conference of Presidents of Major American Jewish Organizations had called on Israeli leaders to reconsider the plan to charge tourists with the VAT.

Also in the budget that passed, funding cuts to the Sephardi Orthodox Shas party’s network of schools were delayed by six months to allow time for the schools to find alternative funding or incorporate the country’s core curriculum.