Banks in Israel: Both publicly owned and limited in CEOs' salaries (Photo: Walla!, Shai Oknin, Reuven Castro, Ori Lentz)
Finance Minister Bezalel Smotrich unveiled his new weapon to combat the high cost of living in front of a hall full of dignitaries and demonstrators at the Eli Hurvitz Conference on Economy and Society: Taxation of Bank Profits. There is no greater pleasure than taking revenge on the depositors and biting interest collectors who make public life a difficult challenge to meet.
"I find great logic in taxing these overprofits at high rates," the minister explained, explaining his choice of bold move, "mainly to prevent the banks from having the motivation to obtain them and to make them roll them back to the public."
The ordinary citizen listened to the minister's words and gasped with excitement: Finally someone is standing beside him, little David, facing the desperate Goliath, who wants to crush him under his heavy foot. And now, justice has been done and the ultimate villain, the embodiment of evil, will now pay a price for his unbridled greed. Right?
So that's not really: this is exactly the point to turn down the dramatic music, open the lights and discover the naked truth behind Smotrich's populist move. You won't believe it, but the finance minister wants to impose another tax on you, ladies and gentlemen, the citizens.
Pictured: A populist finance minister who passed a budget that looted the coffers and is now inciting against the banks in order to fill it back (Photo: Knesset Spokesperson, Noam Moshkovitz)
Who owns the bank?
Once the banks belonged to tycoons. For example, the Arison family controlled Bank Hapoalim, the Recanati families and collapsed at Discount Bank, and more. Those times have passed, and in recent years Israel's largest banks have been operating without a core of control, if you will, like cooperatives, most of whose shares are held by the public.
In other words, you bought shares in the banks through your pension and provident funds, mutual funds and advanced education funds, and almost every citizen of Israel has a tiny piece in some bank. Almost absurdly, on the one hand we groan at the hands of the banks and on the other hand – profit from them indirectly.
To decisively state that the banks are exploiting the public is like complaining about the amount of payment to the scandalous house committee, when you also own the apartment and the public spaces of the building in which you live, belong to you in the land registry.
So what does the finance minister actually want to do? Collect more tax from you. If the banks are forced to pay more taxes to the state coffers (remember: it's not that they don't pay taxes now!), your stock value will drop and you will lose, so it's not revenge against the villains but a shot in the foot.
The bank's CEOs are also problematic to hate. During the days of the nuclei of control, they pocketed substantial sums, but since then their salary has been limited to up to 35 times the employee's salary and no more than NIS 2.5 million a year, equivalent to the salary of a mid-level CEO in the market.
Ask Uri Levin, the outgoing CEO of Discount, who preferred to step down as head of the group and move on to manage the Tidhar real estate company, which, as good and successful as it may be, does not have the darkness and prestige of a bank, but can, if it wishes, pay much more money at the end of the month to its CEO.
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The Prime Minister and the Minister of Economy at the Carrefour branch. Why won't what's good for retail be good for banking? (Photo: Kobi Gideon / GPO)
The desperate desire to fill the coffers he himself plundered
Smotrich's strong desire to tax the banks comes not only from a desire for revenge, but also from the depleted coffers, which are becoming deficit by the minute, after the wild onslaught of coalition funds.
The public has no money and no mood, so there are no taxes either. When there are no taxes, we need to invent quick sources of income to plug the hole – and it is easiest to turn us against the banks, that is, against ourselves.
If the finance minister wants to take care of citizens, he needs to continue what the previous government started in retail and continues the current government, introducing competition into the Israeli banking market. He himself was photographed at a Carrefour branch, like the prime minister and economy minister, and took pride in lowering barriers and reducing regulation in order to help the chain acclimatize in Israel.
He is welcome to do exactly the same with the banks and lower the barriers to standards, regulation and language. An investment of up to NIS 150 million in technological assistance to banks that will open branches here, will open the market to competition, reduce interest rates on credit, increase interest rates on deposits, and no less important – improve customer service.
Bringing foreign banks to Israel is much easier than bringing retail chains here. Barclays Bank runs private banking here, and Citibank had operations in Israel in the past, so they know the market and have enough strength to grant them an operating license.
As soon as branches of foreign banks open here, the customer will turn from a rag to a king. But it's much easier to fool the public with a terrifying monster and hope that it won't understand that what it's actually doing is attacking itself.
- Minister of Finance
- Bezalel Smotrich
- Cost of Living