Israel reportedly mulling ending tax break on imported personal items
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Israel reportedly mulling ending tax break on imported personal items

Canceling exemption for purchases of up to $75 would bring hundreds of millions to state coffers, sources say; move could impact online purchase market, benefiting local retailers

Israeli postal authority workers sort mail at a post office in Tel Aviv, February 22, 2010 (AP Photos/Dan Balilty)
Illustrative: Israeli postal authority workers sort mail at a post office in Tel Aviv, February 22, 2010 (AP Photos/Dan Balilty)

Israel is considering ending a tax break that has allowed residents to order from abroad personal items valued at $75 or less without paying a levy, Bloomberg reported on Wednesday.

According to sources familiar with the matter, the measure has come up during discussions on planning the budget as the country works to restart the economy following a lockdown imposed to counter the spread of the coronavirus. Over the past several weeks, Israel has been rolling back measures, begun in mid-March, that brought the economy to an almost total standstill.

Canceling the current tax waiver would bring hundreds of millions of shekels into state coffers, a source said.

It would also likely impact the country’s e-commerce market, which is worth around $3.7 billion dollars a year, the report said.

A tax on items purchased online from abroad would make them less attractive for consumer, to the benefit of local retailers.

In the wake of the reports, shares in major local retailers took a jump, Bloomberg reported.

The current limit of of $75 is already much lower than in other countries, including the US, the report said.

But a Finance Ministry spokesperson said removing the tax benefit is not being discussed.

Aside from the impact of the coronavirus, a political crisis that lasted for over a year prevented a budget from being passed during that period. A new unity government was sworn in last month and is now preparing a budget for approval by the Knesset.

According to reports earlier this month, the budget deficit rose to 6% of GDP in May, up from 4.8% in April.

The economy contracted by 7.1% in the first quarter of 2020 due to the coronavirus pandemic, the sharpest decline in 20 years, according to an estimate based on partial data released by the Central Bureau of Statistics in late May. The bureau noted that the contraction of the economy was more severe than after the 9/11 attacks and the 2008 global financial crash.

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