Minister of Tourism Stas Misezhnikov today warned that Israel's tourism industry will take a fatal blow if VAT is levied on foreign tourists. He told the Knesset Economic Affairs Committee that unless the measure is removed from the 2009-10 economic arrangements bill, it could result in 290,000 fewer tourists a year and cost 12,000 jobs in the tourism industry. The measure will result in NIS 2.4 billion in lost GDP.
Misezhnikov told the Economic Affairs Committee that adding VAT to the price of a vacation package will drive away tourists to the Palestinian Authority and Jordan, where hotel prices are much cheaper.
Misezhnikov presented figures showing that Israel's net income from levying VAT on tourist services, will amount to NIS 50 million in the coming year.
At the end of the discussion, the Economic Affairs Committee concluded that paralleling the marketing of Israeli tourism, it is necessary to increase the supply of hotel rooms nationwide, in order to reduce prices for both foreign and domestic tourists.
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2009
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