The economists at the Ministry of Finance have again missed the mark with their forecasts. Israel will have a budget surplus of at least NIS 10 billion in 2017, which Minister of Finance Moshe Kahlon could have handed out to disabled people, senior citizens, soldiers during compulsory service, mothers and fathers, grandfathers, and great-grandchildren. All these billions will now be wasted on paying off the government's debt if Kahlon does not hurry to use them to cut taxes, which will benefit mostly rich people.
Why was there a budget surplus again this year? Did the Ministry of Finance deliberately use an over-conservative forecast? Logic says no, because this year's entire surplus is attributable to what are called "one-time events." It cannot be ignored, however, that the same story has repeated itself five years running. Former Minister of Finance Yair Lapid realized what was going on after two years, and angrily asked his officials, "Is this what you want?" He asked them in the presence of bereaved families, "Do you want it inscribed on your tombs, 'Here lies Moshe, who kept the budget balanced – May his memory be blessed without a deficit'?"
Kahlon's style is a little more respectable and elegant, but he is also unwilling to see his budget surplus thrown into the electoral wastebasket called repaying the national debt.
After pulling a tax cut out of his hat three times, everyone is trying to guess what he will come up with this time. Prime Minister Benjamin Netanyahu and his rightwing economists want an income tax cut that will help people with high salaries groaning under the burden. Battered and bruised capital market investors want a cut in the stock market tax. Kahlon himself is in love with aid to working families. He wants a temporary tax credit – anything to avoid wasting money on reducing the debt, God forbid. When has Israel ever elected a politician because of his responsible budget policy? When did the voters ever reward anyone who told them, "It's better to reduce the deficit, because living beyond your means comes at the expense of the future - at your children's expense"? A zero deficit (and high taxes) is an idea familiar mainly to the public in Germany, northern European countries, and Scandinavia - in short the same countries about which people love to say, "Why not here? Why can't we do it?"
Published by Globes [online], Israel Business News - www.globes-online.com - on October 15, 2017
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