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A letter to the new Minister of Finance: the things you can change, if you only want - voila! Of money

2022-11-18T05:23:17.119Z


Instead of worrying only about the sectors that are close to the new government, Mr. Designated Minister of Finance, you can change some things from the ground up to make Israel a country with a healthier society


In the last week, many questions have been raised regarding the budgetary sources for the realization of the coalition agreements in the new right-wing government, right-wing.

At the moment, new visible budgets are required and in the future there will be more and more demands, each according to his ability to transfer buckets of money and budgets to his voters, to the groups he represents and not necessarily for the benefit of the economy.



There is no change here compared to previous coalitions in which budgets were transferred in money or the equivalent of money to those close to the government, such as land as demanded by the Labor Party in the coalition agreement of the outgoing government, construction rights and profit on the side in millions of shekels in the form of strengthening buildings against earthquakes or prestigious positions that bring in wages and related conditions in the form of legitimate jobs , who were chosen by homogenous committees (usually) on behalf of the government and took care of the layers close to him. But it is natural that the new finance minister will direct budgets that are beneficial to his constituents and also to the realization of the agenda of the coalition parties.

Taxes Authority.

The tax rate in Israel is one of the lowest in the world (Photo: Flash 90, Olivier Fitosi)

The virus that infected

Know the new Minister of Finance, that there is a possibility to do this without breaching the budget deficit framework.

Right now there is actually a budget surplus.

Yes, it is possible to maintain a budgetary framework with a clenched hand in order to save budgets for the next day, but we remind you that due to the responsible behavior of the governments since the nineties of the last century - and especially in the last twenty years since 2004 - the government could and did make a huge budgetary injection of about NIS 180 billion In order to prevent the collapse of the economic, occupational and health systems, during the corona virus.

Because only a strong economy like Israel has, could and will carry out such a broad and comprehensive operation to save the Israeli economy and society on a closed day.



First and foremost, we note that contrary to the popular opinion among the public that the GDP tax rate in Israel is among the lowest in the world, in 2020 it stood at 29.7% compared to 33.5% in the OECD countries, which is the Organization for Economic Cooperation and Development, which Israel refers to as a point of reference.

In the last 12 months, the share of government revenue mainly from taxes and other sources, of course not raising capital, has dropped to 27.2% of GDP compared to 33.7% at the end of the first quarter last year.



The tax burden in Israel, which between 2000-2007 was about 33-34% relative to GDP, dropped sharply in 2008 following the global economic crisis to 30-34% (this is excluding the year 2017 when the Treasury encouraged taxpayers to pay a dividend with an accompanying tax deduction) , according to the Treasury data.



More than half of the decrease in the tax burden is explained by tax reductions initiated between 2003-2009, when in the first two years of this period Benjamin Netanyahu served as finance minister, soon again as prime minister.

Binyamin Netanyahu was then the finance minister in the Ariel Sharon government in which he introduced a neoliberal free market policy while cutting welfare, especially child benefits, at the same time as increasing privatization and reducing taxes.



The conclusion is that it is possible to raise taxes at a slight rate to get closer to the tax rate in the OECD countries, to finance the expenses of the new government, including the welfare of those who will escape from the cycle of slavery during the approaching economic slowdown.



Do you know, the new Minister of Finance, that at the same time, in order to make it easier for the weaker sections, the VAT rate can be reduced in two pulses of 1% per pulse. Since the VAT is regressive, it hurts more the weak, who spend more than the rich out of all their VAT-obligated income. "M" is imposed at a relatively broad and more favorable rate on the weaker groups compared to the stronger ones whose VAT on all their income is low because they do not spend a high rate on the income on current consumption within Israel.

Even families with an average income find it difficult to cope with the monthly repayment of the mortgage, while the apartment owners are favorably discriminated against (Photo: ShutterStock)

tax the rich

The financing of the tax reductions can come from the taxation of the powerful at the following meeting points with the tax authorities for which you, the Minister of Finance, are responsible: the imposition of a property tax on all real estate assets as was customary in Israel until 1980 and as was customary all over the world.



Get over yourself if you are a property owner yourself Rabbi, because the common good obliges. Property tax is a tax on the accumulation of assets that the public has. In contrast to a purchase tax when purchasing real estate property and an appreciation tax, with a given formula, imposed on the real profit inherent between the cost of purchasing an apartment and its sale price.

Know that there is no reason to make it difficult specifically for young home buyers and housing improvers compared to those who already enjoy real estate properties whose prices have risen since 2008.



We will remind you, the new Minister of Finance, that the mortgage repayment has increased at a considerable rate, inflation has increased and the real wage has begun to shrink.

This means that it is very difficult for young families to survive even if they have two salaries.

Let's say one salary is 9,240 shekels per month where the marginal tax is 14% and let's say the salary of a daughter or spouse is 14,840 shekels per month, on which the marginal tax is already 20%.



While these groan under the monthly burden, those with high incomes and those with wealth live well because the State of Israel has a distinct tendency to help the rich.

The annual cost to the treasury for the apartment rental exemption, for which the state does not collect taxes, could reach NIS 3 billion this year.

I mean, young couples are taxed on income from work and subsidize the capitalists, who rent out the apartments, is there a greater absurdity than this, Minister of Finance?



Another of Israel's wonders, a partial waiver of income tax at an annual cost of NIS 2.1 billion from gambling income.

This means that employees who meet the requirements will pay full tax while gamblers are partially exempt, this screams to heaven.



Another Israeli system that needs to be removed from the world that has no justification is the exemption from income tax on the employer's deposit and the profits of the continuing education fund, at a cost of approximately NIS 7 billion per year.

Who benefits from this, especially those with a salary twice as high or more than the average salary in the economy, which is NIS 12,258.

The provision is possible for those who have rented up to NIS 26,378 per month this year.

He can benefit from an exemption for the employer's deposits in the amount of 7.5% of his salary and the profits of the training fund will also be exempt from income tax.



The new Minister of Finance, know that the exemption of the training fund is a sacred cow, if you have a conflict with the Histadrut, you can certainly use this point of canceling the ridiculous exemption from taxes that has no justification except to help the powerful who benefit from a training fund and are not obligated to pay full taxes according to Income tax rates.

Why is there an exemption from VAT for tourists in Israel? (Photo: ShutterStock)

Learn from Lieberman

The new finance minister, don't say it's hard to change world order, go to the outgoing finance minister Avigdor Lieberman, learn his ways and understand.

In October of this year, Lieberman did the unbelievable, canceling the issuance of pension bonds that promised a crazy annual return for the state treasury obligation of 4.86% for about 30% of the pension fund's assets.



It is true that there is a government promise that if the pension fund does not reach a guaranteed return of 5.15% for 30 % of the fund, the Treasury will compensate, but over the years the Treasury will find ways to reduce the budget cost of the pension subsidy, which naturally mostly goes to those with high wages.



Please note, Minister of Finance, that in 2020 the Treasury paid an insane amount of NIS 7.5 billion in excess costs for the pension subsidy, Isn't it a shame? Today the designated bonds make up 22% of the total debt of the Israeli government, reaching an accumulation of perhaps a quarter of a trillion shekels.

Obviously, naturally those with high salaries benefited and still benefit from an unfair subsidy in terms of equality for the accumulation of pension assets.



It is to be hoped that the Treasury's promises to compensate pension funds that have not reached a given rate of return will not be fulfilled in the future because those who benefit from high subsidies are the most powerful in Israeli society compared to those with low wages.



We will also reveal to you the new Minister of Finance that there is an absurdity in Israel that still behaves in the field of tourism as if it were a developing country in its infancy and is looking for foreign exchange candles, dollars in the language of the people. All of you travelers abroad pay VAT in hotels around the world and also for tourist services. Israel in its whimsy is still not VAT is imposed on the consumption of services by tourists in Israel, the cost of which is approximately NIS 360 million per year.

Wouldn't it be worthwhile with this amount to subsidize day care centers and the training of nannies and increase their poor wages so that more women could go to work?



Another of the old world that currently exists is the exemption that KKL has from taxing its profits by law. Although a compromise was reached five years ago that the National Fund for Israel would transfer NIS 1.8 billion to the Treasury for two to three years and in return the initiative for a law that would oblige this archaic body to pay taxes regularly and by law would be canceled Like the other companies and businesses in the State of Israel. Why do we need a settlement? Who is afraid of KKL-Junk?

There are new legislators in Jerusalem who have just been elected and their job is to align, so that KKL-Junk will pay like any other business entity, without special arrangements, a payment according to the law.



There is no need to negotiate with an existing fund as the Treasury does not negotiate with other businesses that are legally required to pay.

Why is there no such legislation?

Maybe because the legislators and all those close to KKL-JV take care of arranging work for their associates with a huge salary, without actually doing anything? The new Minister of Finance, even if you have relatives in KKL-JV, will you propose to pass an unequivocal bill to force KKL-JV to pay taxes according to the law. With money If collected from KKL-Junk, it will be possible to recruit thousands more police officers within the Ministry of Internal Security and raise the salaries of the existing police officers by tens of percent.



The new and old police officers will try to prevent the takeover of the nation's lands, to prevent agricultural crime, the collection of sponsorship fees in Israel and wild behavior on the roads of the south and the burning of forests that are so close to the heart of KKL-Junk. It is also possible to use this money for professional training, vocational retraining and core studies, for those who wish to do so , so that his income from work will increase in the future, due to the increase in his professional abilities or his basic understanding of the computer, typing, simple arithmetic and even in basic English? Maybe he can join the police after core studies?

Who is admitted to the subsidized universities?

Mainly children from families of high socio-economic status.

The poorer study in expensive colleges (Photo: ShutterStock)

Tuition

If we're talking about education and studies, maybe it's time to raise the tuition fees in the universities close to the budgetary cost of maintaining the institutions budgeted by the treasury through the arm of the Council for Higher Education, the Council for Higher Education, and the Committee for Planning and Budgeting, the Hotat?

The annual budget is about NIS 12.5 billion for 180,210 students, which means a cost of about 69,000 per student.



There is a place to subsidize university studies also because 10% of civil research and development is done in universities.

The question is the scope of the subsidy, why is tuition at universities for a bachelor's degree stuck for many years at about 11,000 shekels a year and for a master's degree close to 15,000 a year?

Wasn't there room to raise tuition and give discounts to the poor from low socio-economic strata - and to help others through a state loan?

Is there no room for differential tuition fees?



We will reveal a secret to you, Mr. Designated Minister of Finance: the prestigious universities, which are subsidized by the tax payer, naturally admit students from the upper deciles, from high socio-economic strata who have received education and training that allows them to be admitted to studies that require high scores in psychometric tests. The rest, who fail to reach the score high, because they came from relatively weak homes, are forced to study and work at the same time, with no support from the family unit. Those who were not admitted to universities at the taxpayer's expense, sometimes study in private colleges where tuition is four times higher.



It therefore follows that the state subsidizes the elites at the expense of the weaker family units.

Therefore, the question is, wouldn't it be better if the graduates who wish to acquire a higher education, receive the same benefits and even more so that the chances of the weak to achieve achievements will increase, and thus be able to enter the rewarding job market with a high salary?

With the savings that the state will make by changing the subsidy to the strong, it can make use of investing in the critical education of one to six year olds that affects their adult lives later on.



In this way, it is possible to use the funds that will be saved to invest in English, mathematics, physics and computer studies in such a way that the scope of the budget in the high schools will not be equal, but the results will be equal, even differential amounts will be required to achieve achievements in high schools in peripheral cities and towns (geographically or socio-economically)?



I am afraid that these words, Minister of Finance, will fall on deaf ears.

Not that there are new discoveries here, there is simply no desire and intention to build a more just society.

There are many more options before you, Minister of Finance, for a start this is reasonable material.

True, it is much easier to incite a politician in his fellow man and thereby divert the discussion from the main point, but if you are reading, Mr. Designated Minister of Finance, maybe you will also accept, not to mention apply.

  • Of money

Tags

  • Minister of Finance

  • Benjamin Netanyahu

  • housing

Source: walla

All business articles on 2022-11-18

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