Israel's purchasing power eroding
The economists state that better public services can be funded by raising direct taxes, including the company tax and capital market taxes.
The tent protesters have won support from some of Israel's top economists including Prof. Joseph Zeira of Hebrew University. Today, a group of economists published an opinion in which they say that the protest is strongly justified. Signatories include Zeira, former Bank of Israel deputy governor Avia Spivak, and former Ministry of Finance director general Avi Ben-Bassat.
The opinion's authors want to counter opponents of the protest, who claim that improving public services will weaken Israel's economic standing. The economists state that better public services can be funded by raising direct taxes, especially on the wealthy, as well as raising the company tax and capital market taxes. "Such a policy does not harm economic growth as the experience from Israel and other countries demonstrates," state the opinion piece.
Two days ago, Ben-Bassat turned down a request by Prof. Manuel Trajtenberg to join Prime Minister Benjamin Netanyahu's Rothschild team, which he heading. Officially, Ben-Basset said that his work load preventing him from participating in the team, but sources close to the team say that it was expected that he would criticize the team from outside.
"Two years ago, I headed a team at the Caesarea Conference, which discussed the proper level of government involvement in the economy," said Zeira. "We concluded that this was not an economic question, but a political-social-value question. In the past, the government presented the reduction in the number of ministers as an economic imperative, not as an ideology. Our report showed that this was not a necessity, but a choice. That is why there was room to object to the choice and present a more equitable and just alternative.
"The main point was that formulating social-economic policy is not solely an economics matter. Economics can help on the technical side, but the main trends must be discussed in an open public forum. If the public wants to increase government involvement and the social services that it provides, and is prepared to finance this through higher taxes, it is the government's duty to decide to do so."
Published by Globes [online], Israel business news - www.globes-online.com - on August 10, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
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