The Prime Minister and the Minister of Finance reiterate this morning and tonight that the economic plan they have presented increases the disposable income for working families.
The big problem with using this tool is that the compensation is given to working families who earn well above the minimum wage and in many cases only to those who earn above average wages in the economy, and especially to families living in Gush Dan, Jerusalem and Haifa, ie in established cities.
Explain: A credit point is a component that gives a tax deduction after the citizen's tax has already been calculated.
The tax calculation is personal and influenced by many components.
Many residents of localities receive a specific tax credit, which in effect means that they will pay the first tax shekel only if their income exceeds NIS 12,000 a month and even more.
That is, a working person whose income is less than this amount and lives in a qualifying locality will not benefit even if we add more credit points because he does not actually use them.
In fact, many citizens who work and earn even NIS 3,000 above the minimum wage (that is, about NIS 8,000), still do not pay any tax today because of the deductions and credits they already deserve, and will not enjoy any benefit given to them in additional credits.
Who will benefit from the program?
For example, a high-tech worker around the age of 35 with an income of about NIS 30,000 per month, who has three children in the declared age range, will receive a benefit of about NIS 670 per month.
The government gives a benefit to a group that does not really need it and leaves the rest of the population unanswered, and it does not even hide it.
What should the government have done?
Address indirect taxes and especially VAT. In many European countries there is a different VAT on different products, for example, a reduced tax on food products.
Reducing VAT on food products from 17% today to 7%, for example, will lead to an immediate reduction in prices by about 9% for all sections of the population (except for fruits and vegetables for which VAT is already paid).
A family that consumes food at a thousand shekels a week will save a few hundred shekels a month, regardless of any personal parameter, and thus the price increases that have already taken place will be offset, and the personal cost of living for each citizen will decrease.
This is a lower cost of living in general.
For young and old, for the people of the periphery and the people of the center.
For the ultra-Orthodox, Arabs and veteran immigrants.
This will be a real compensation for the price increases.
I believe that such a change will be fully rolled out to consumers and that the marketing chains will not use it to make a profit at our expense.
I also believe that the public atmosphere will punish business owners who try to take advantage of the change in VAT.
The Ministry of Finance can use this tool for a pre-determined period or change it at any time. Such a change will also affect the price index and interest rates in the economy.
In the prices of fruits and vegetables, VAT as stated is not a parameter in the game, and here a profound reform is required that requires courage, in the hope that the Treasury will regionalize it.
Were we wrong?
Fixed!
If you found an error in the article, we'll be happy for you to share it with us
