The Central Bank in Israel has issued an economic policy due to warn to the Government, cautioning that the introduction of VAT splits without compensatory tax hikes will push the discrepancy to as high as 4% of GDP against a target of 2.5%. On the basis of country’s current fiscal plans, tax rates are not to be increased, a 0% VAT rate will be initiated for some categories of taxpayers in 2015 and government spending will rise by 2.6% in real terms.
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