Israel eyes tax cuts as Intel-Mobileye deal to boost coffers by $1 billion - Metro US

Israel eyes tax cuts as Intel-Mobileye deal to boost coffers by $1 billion

By Steven Scheer

JERUSALEM (Reuters) – Israel’s government will receive about 4 billion shekels ($1.1 billion) after Intel’s planned $15.3 billion purchase of self-driving car tech firm Mobileye , helping the government cut more taxes, Finance Minister Moshe Kahlon said on Tuesday.

Kahlon said that the extra revenue was small compared with the total annual tax take of almost 300 billion shekels but that it would help the government cut other taxes.

The funds from the Mobileye deal will come from capital gains taxes of as much as 30 percent that top shareholders will pay when they sell their stakes in the company.

Kahlon said even without the Mobileye deal, the largest technology takeover in Israel’s history, he was planning tax cuts.

“I am in favor of lowering taxes. I have lowered taxes in the past. It’s my policy,” Kahlon said on Army Radio.

Prime Minister Benjamin Netanyahu said he and Kahlon had agreed to formulate a plan to reduce taxes to further stimulate economic activity.

The Bank of Israel opposes tax cuts, believing excess revenue should go towards debt reduction.

Opposition leader Isaac Herzog said funds from the Mobileye deal should be diverted to bolstering the public health system.

Israel’s economy grew 4 percent in 2016 but growth is expected to slow to around 3.5 percent this year.

In January, Kahlon said he would consider more tax cuts this year if tax revenue kept exceeding expectations. He lowered corporate tax by one point to 24 percent at the start of 2017, and the rate will drop to 23 percent at the start of 2018. Income taxes were also reduced.

Kahlon declined to detail what taxes would be lowered in the next round but local media said value-added tax would fall from the current 17 percent while corporate taxes would be cut again.

A spokesman for Kahlon was not available to comment.

In the first two months of 2017, Israel collected 51.8 billion shekels in tax revenue, 6 percent more than a year earlier.

(Editing by Hugh Lawson)

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