Uri Ariel has realized all to quickly that the power of the housing minister in Israel, which has for a long time neither built nor housed anyone, is mostly in pompous and populist statements to the media.
Just a week ago, at the "Globes" Real Estate Summit, the new housing minister said that he was still studying the material, and this week, before the new housing cabinet could pull rabbits out of its hat and steal the show from him, Ariel called for the cancelling of VAT for first-time homebuyers and for building in the E1 block between Jerusalem and Maaleh Adumim in the West Bank.
The common denominator of these statements is clear. First, they have no connection with the Ministry of Housing. With all due respect Ariel will not decide whether to levy or cancel VAT on anything, nor has he spoken with the Ministry of Finance. Ariel is also not the man who will decide whether to build in the most controversial site in the long dispute between Israel, the Palestinian Authority, and the US. There are no more hackneyed proposals in the current Knesset than cancelling VAT on first homes or massive construction at E1.
Regarding the cancelation of VAT on the purchase of a first home: 10,000 new apartments are sold annually in Israel as a first home; the VAT on these sales generate nearly NIS 3 billion in revenues. Minister of Finance Yair Lapid, who will chair the housing cabinet, is busy seeking sources of revenue to plug the gaping deficit hole and he will undoubtedly be pleased to hear Ariel, a member of the cabinet calling for digging the hole even deeper, guaranteeing mutual confidence and fruitful brainstorming in the new cabinet.
The idea is not necessarily bad. Notwithstanding the historic opposition by Ministry of Finance officials, there are very complicated ways to ensure that the VAT exemption will go to homebuyers rather than contractors who will enjoy over demand.
But, the housing minister, especially when he is also full-time chairman of the Israel Land Administration Council (at least until Moshe Kahlon returns from his studies at Harvard), should get used to the fact that he is a minister with authority, and not an adviser or an opposition MK who needs a stage to release old slogans.
He is the man who is supposed to work day and night in the coming months and years to create land for marketing throughout the country, and he is responsible that the potential for tens of thousands of housing units in Rosh Ha'Ayin, Yavne, Modi'in, Kiryat Gat, and elsewhere are built quickly so that the housing supply will finally bring down prices.
Worthless words
On matters of taxation (VAT, betterment tax, purchase tax, etc.), the interest rate, transportation, and so forth, all be can do is pound the table, make suggestions to the relevant minister or to the housing cabinet, and use this list as an excuse when the time comes to explain his lost battle against housing prices. But he should not use them quickly as populist headlines and non-binding promises and worthless words in the media.
Published by Globes [online], Israel business news - www.globes-online.com - on April 18, 2013
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