Lapid housing plan targets Israel's 'next generation'
The plan to reduce housing prices for young couples should earn back Finance Minister Yair Lapid's reputation as an ardent social activist, defending the rights of those who served in the army.
A quick look at the Israeli finance minister's calendar for the past few months suffices to understand what is truly engaging Yair Lapid, the chairman of the Yesh Atid Party, these days: preparations for the approval of the zero value added tax (VAT) plan for first-time home buyers.
Lapid, who came out with his surprising plan in mid-March 2014 to push down housing costs, is working to obtain approval for the bill by the end of the Knesset’s summer session in early August. The legislation is facing a potential minefield and has a legal sword hovering above it. It is estimated that petitions would be submitted to the high court, claiming discrimination against Israeli Arabs and the ultra-Orthodox. The set of criteria defining the benefit eligibility — meaning VAT exemption on apartments costing up to NIS 1.6 million ($460,000) — stipulates that it be granted only to those who have served in the military or volunteered for national service.
Lapid figures he has managed to overcome this legal pitfall in light of an opinion by the attorney general, who announced that those who did not serve in the military will also be eligible but only for housing priced up to NIS 600,000 ($172,000). Nonetheless, Lapid is likely to eventually have to raise that cap to obtain Knesset approval for his bill.
Either way, the zero VAT bill is undoubtedly one of the most pretentious moves, bearing huge risks, undertaken by an Israeli politician in recent years. It is not just the issue of discrimination, but mostly the possibility that the move will achieve the opposite result and housing costs will keep spinning out of control. By the way, senior treasury officials have warned Lapid of this possibility.
