Opposition by professional staff at the Ministry of Finance today prevented the planned announcement of Minister of Finance Moshe Kahlon's plan for industrial aid. Ministry of Finance sources told "Globes" that the program, which was designed to help industrialists and exporters, based on recommendations by a committee headed by Ministry of Finance director general Shai Babad for improvement in the competitiveness of Israeli industry, would be presented by Kahlon, Minister of Economy and Industry Eli Cohen, and Manufacturers Association of Israel president Shraga Brosh only after Rosh Hashanah. While it appeared yesterday that the parties had reached agreement, it emerged during the night that the budget department was generally opposed to any increase in budgetary spending for the benefit of industrialists. The department presented the budget framework to the minister of finance, and showed him that even before the industrialists had been promised a single shekel, the government was already deviating from the legally permitted budget spending ceiling by hundreds of millions of shekels.
Ministry of Finance sources today asserted that it had been ensured today that the industrial aid plan would not increase budgetary spending, as demanded by the budget department. The parties, however, are still disputing tax benefits to be granted to industrialists. The tax benefits package is worth a total of NIS 1 billion. After the budget department opposed allowing accelerated depreciation, ideas for other tax benefits were raised during the day that did not change the overall amount of the package. The Ministry of Finance has some flexibility on tax benefits, because the budget deficit is expected to be significantly lower than planned as a result of a NIS 7 billion surplus in state tax revenues in 2017.
In addition to the monetary benefits on which the industrial aid program is based, it also includes cancellation and lightening of many regulations, the most important of which are in licenses for business, planning and building, fire safety, and matters pertaining to environmental protection. Sources involved in the issue asserted that the regulatory concessions had no budgetary significance, so the government ministries feel comfortable with such measures. "The industrialists have good reason to feel satisfied with the emerging plan. As far as they are concerned, all the obstacles were removed in the meeting with Babad, and they emerged with smiling faces. They got a package that was good in the places important to them, from environmental regulations that irked them for many years, business licensing and fire safety certification, a special fund for increasing productivity, far-reaching tax benefits, and a great deal of money for professional and technological education. This is a program whose implementation as drafted is worth fighting for," a source involved in formulating the plan told "Globes."
Published by Globes [online], Israel Business News - www.globes-online.com - on September 18, 2017
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