Exclusive: The Finance Ministry plans to cut VAT tax breaks for holiday-makers on vacation in Israel and tourists arriving to Israel may have to start paying VAT on hotels and travel services.

According to indication coming out from sources in the Israel government, the new Finance Minister Yair Lapid intends to cancel the VAT exemption currently in place for tourists.

The move is likely to bring another NIS 300 million to NIS 500 million into state coffers annually.

The Israeli Tourism Industry leaders held today an emergency meeting in order to find ways to fight this decision. The Director General of the Israeli Tourism Ministry – Mr. Noaz Bar Nir wrote a letter to the Prime Minister's office in which he wrote "Imposing VAT on incoming tourism services will be a great mistake that its value is much smaller than the damage it will do"

The Presidents of the Israeli Hotel Association as well as the Israeli Travel Agents Association have written letters to the Prime Minister Mr. Benjamin Netanyahu in which they are trying to convince him to intervene against the intention of imposing an additional charge to the tourist will hit the industry.

According to recent Hotel Price Index   and STR Global indexes hotels in Tel-Aviv and Jerusalem are amongst the most expensive in the region and more expensive than many of in comparison to their equivalent hotels in major European cities.

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Joseph Fischer is the CEO of Vision Hospitality & Travel - International Lodging and Travel Solutions.