Israeli taxes on homes are 75% above the OECD average, claims a study by Jerusalem Institute for Market Studies. The position paper says that the government's housing and dairy products are failures - and that no market failures are involved. The paper also noted that politicians blame the market to cover their own shortcomings.
The Jerusalem Institute cites a World Bank study that ranks Israel in 121st place in the world for efficiency in obtaining building permits, and 147th place for efficiency in obtaining property rights after a real estate purchase. These procedures take four times longer in Israel compared with the OECD average.
The Jerusalem Institute note the heavy tax burden on real estate, which generate 9.4% of the government's tax revenues, compared with the OECD average of 5.4%
"When government measures fail to achieve their desired results, there is a tendency to blame the market," says Jerusalem Institute markets researcher Yarden Gazit, "but in the case of the housing market, the failure is a government failure from A to Z."
Gazit says that government policy is responsible for the price rises for basic food products. "Israel's dairy market is run on the Soviet model. The Israel Dairy Board sets how much milk will be produced, by whom, and the price it will be sold to dairies. Imports and free competition are banned by the Dairy Market Planning Law."
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2011
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