News Column

BRIEF: BoI Governor: 0% VAT will raise home prices

July 7, 2014

By Irit Avissar and Adrian Filut, Globes, Tel Aviv, Israel

July 07--Governor of the Bank of Israel Dr. Karnit Flug has slammed the 0% VAT plan for new homes for first time buyers in her survey to the Monetary Committee. She said, "The 0% VAT plan will fuel home price rises and increase demand. The most efficient instrument for lowering home prices is increasing the supply of apartments."

Flug's comments put her on a direct collision course with Minister of Finance Yair Lapid who is leading the 0% VAT plan for the purchase of first homes costing up to NIS 1.6 million. Lapid is convinced that plan will be decisive in bringing down prices.

Flug also commented on Lapid's plans to place restrictions on executive salaries in the financial sector. She said, "The norms that the Finance Minister is proposing on remuneration in the financial sector must be broad and applicable to all public companies."


(c)2014 the Globes (Tel Aviv, Israel)

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Source: Globes (Tel Aviv)

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