The Trajtenberg committee for socioeconomic change this evening presented its recommendations to Prime Minister Benjamin Netanyahu. Prof. Manuel Trajtenberg said that he hoped the recommendations would be adopted as a single package by the government.
During the press conference, young protesters burst into the hall and shouted out their opposition to the "tepid" recommendations of the Trajtenberg Committee. The protesters were ejected from the hall by security staff but their shouts could still be heard during Trajtenberg's speech. He said, "This only makes more tangible the great responsibility that I have."
Protest leaders Dafni Leef and Stav Shafir, the leaders of the tent protests, were present at the press conference.
Prof. Trajtenberg said, "Social justice means striking a balance between reward and punishment between contributing to society and the remuneration that you get. Social justice means equal opportunities because everyone is born equal. We believe that everyone needs to be given opportunities. You need fair rules of competition and when you reach retirement you need to receive relations based on respect."
A quick glance at the recommendations of the report will be a major disappointment for those wanting a change in economic priorities. The changes in taxation will perpetuate social gaps and hurt the middle class. The recommendations regarding education are mainly recycled and are unlikely to ever be implemented. Recommendations concerning the employment market and health are very wordy and include few operative measures.
The panel of professors advising the social protesters have in effect already rejected the recommendations.
Here are the main points of the recommendations.
What the committee is giving.
Tax points for fathers: two tax points for each child under 3: cost NIS 1 billion per year.
Reduction in fuel excise: the planned rise of 40% in excise for gasoline and 20% for diesel in 2012 has been cancelled: cost NIS 2.5 billion per year.
Customs and purchase tax: import tariffs on electrical products and foodstuffs will be reduced: cost NIS 1.5 billion per year.
Cancelling the National Insurance ceiling: the ceiling for money set aside for National Insurance and Health Tax will return to five times the average salary from the current nine times: cost NIS 800 million anually.
Negative income tax: negative income tax for working mothers will be increased by 50%. Cost NIS 800 millioon over five years.
Educational benefits: free mandatory education for 3-4 year olds, expanding day care for 0-3 year olds, and afternoon classes for 3-9 year olds. Cost NIS 20 billion over five years.
What the committee is taking.
Freezing tax reform: Lowering income tax in 2012 mainly for the middle classes will be cancelled: adds NIS 2.5 billion to the state coffers.
Raising income tax: Those earning more than NIS 40,231 per month will pay 48% tax instead of 45%: adds NIS 800 million in revenues.
Companies tax will be raised from 24% to 25% and possibly 26% in 2013. Adds NIS 700 million in revenues.
Raising tax on capital gains, interest and dividends on the Tel Aviv Stock Exchange from 20% to 25%. Adds NIS 1.3 billion to the state coffers.
Tax on the wealthy: an extra tax of 2% on people earning more than NIS 1 million annually will add NIS 400 million in tax revenues.
Raising National Insurance: raising the money paid by employers to National Insurance. Adds NIS 1.3 billion in revenues.
Real estate proposals include long-term rental housing, promoting the construction of 165,000 apartments on available land, easing terms of developers in land tenders; encouraging the construction of small apartments, levying fines for unoccupied apartments, and NIS 30 million for vacate and build projects.
Published by Globes, Israel business news - www.globes-online.com - on September 26, 2011
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