Growth is good, but not good enough
The recommendations are a disappointment for those demanding a change in economic priorities.
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
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
You comment was recieved and soon will be published.
Thank you for posting your comment, which will be reviewed for publication.
Load more comments
BlackRock Managing Director Stephen Cohen spoke at the "Globes"-BDO Ziv Haft Capital Market Conference.
Israel 11th in Bloomberg Gas Price Ranking
Israel is just below Finland in the ranking, and above Hong Kong and Britain.
Andorn: No tax hike to increase defense budget
The Finance Ministry director said more money should go to civilian services.
Tax Authority targets big spenders
Under suspicion are those who make frequent overseas trips, and unusually large capital market transactions.
Patrick Drahi ousts Eyal Ofer as richest Israeli
"Forbes Israel": Israel's 100 richest people's wealth equals 850,000 ordinary Israelis.
Police: Indict Olmert, Tel-Zur for obstructing justice
The police say Ehud Olmert and lawyer Navot Tel-Zur attempted to dissuade Shula Zaken from testifying.
Treasury forecasts just 3.1% growth in 2015
The IMF and OECD see 3.4% and 3.5% growth respectively in 2015.
TA Art Museum, Russia's Hermitage to collaborate
The announcement reflects the Tel Aviv Museum of Art's standing in the art world.
Lapid: I've learned economics at the people's expense
"A finance minister does not have to be an economist, but must know priorities."
Unemployment still falling
Israel's 5.6% unemployment rate in April is one of the lowest in the OECD.
C'tee calls for limiting cash deals to NIS 7,500
The Locker committee recommends a series of restrictions on the use of cash and checks.
Shekel strengthens as rate decision awaited
Analysts are split over whether the Bank of Israel will announce a rate cut today.
Analysts split on June interest rate decision
Even analysts who see the rate unchanged believe that it will be cut in a few months.
High Court bans yeshiva student stipends
The High Court of Justice: Yeshiva stipends discriminate against university students.
Teddy Sagi in talks to buy English football club - report
"The Reading Post": Teddy Sagi is in talks to acquire Championship side Reading.
Fitch affirms Israel's rating
The outlook for the 'A' long-term foreign currency rating is positive.
Change Israeli education from the ground up
Governments cannot reform our education system without a change in perceptions.
"You can't teach entrepreneurship"
Angel investor Zohar Gilon relies on his own judgement rather than due diligence when selecting investments.
If Rose Fostanes played basketball
Reforms in regulations for foreign caregivers are welcome, but don't go far enough.
Antitrust Authority disappoints on gas competition
The only new company that will compete against Tamar and Leviathan will own less than 8% of Israel's proven gas reserves.
When innovation means a refrigerator
Jamshyd Godrej believes economic development in India must go hand in hand with environmental and social awareness.
Prof. Zvi Eckstein supports NIS 3.30-3.40/$ floor rate
The former deputy Bank of Israel Governor is the first senior figure from the financial system to advocate a floor rate.
2013 boom year for Israeli high-tech
In the first half of the year, there was a 52% rise in demand for mobile and web developers, and salaries are up as well.
Strong shekel forces Israeli manufacturers abroad
Israeli manufacturers tell "Globes" they are losing money due to the current strength of the shekel.
"Ending QE3 will harm the economy"
Prof. Richard Clarida will tell "Globes" Israel Business Conference that the main risk to the US economy is its political system.
Israel offers favorable tax regime for companies
"Globes" and Baker Tilly Israel accountants found Israel's tax benefits are among the most attractive in the West.
Slowdown will worsen
The vested interests that continue to claim that the economy is improving are deceiving the public, says Eyal Horowitz.
Can the US maintain growth after QE3?
Leading economists will discuss "The US: catch 22 the zero interest rate" at the "Globes" 2013 Israel Business Conference.
"The worst could still be ahead in Europe"
Prof. Charles Wyplosz will discuss Eurozone recovery at the Globes Israel Business Conference on December 8-9.
"Let capital pipelines function to full potential"
Amir Bramly argues that limited investment supply is stifling small and medium Israeli companies.