Responding to public pressure over a series of tax hikes and budget cuts, Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz said Monday they would cancel a planned raise in taxes for middle income earners.
The new plan will hit harder at higher wage earners instead.
The financial package was approved by the Knesset on first reading on Monday.
Netanyahu and Steinitz agreed with Knesset Labor, Welfare and Health Committee chairman Haim Katz on the cancellation of the planned tax hike for wage earners in the NIS 8,881-NIS14,000 bracket.
In addition, tax brackets will be broadened after critics of last week’s budget claimed it unfairly burdened mid-range earners more than highly-paid employees. The NIS 21,800 tax bracket will be lowered to start at NIS 21,000 and the NIS 14,400 bracket will be expanded down to NIS 14,000, the report said.
Last week, the cabinet approved a series of budgetary measures that included raising income tax and taxes on cigarettes and beer, and budgetary cuts for most ministries. The plan was touted as being an economic safeguard against the country sliding into a recession.
The austerity plan is also designed to close much of the deficit for the 2013 budget.
Knesset Speaker Reuven Rivlin (Likud) on Monday said he was losing patience with the delay in submitting the budget for Knesset approval.
“Refraining from submitting a budget by October is, in practical terms, an announcement of going to elections,” Rivlin said. “From a constitutional point of view it cannot be that the government doesn’t submit a budget by October.”