We all love magic, but when making decisions that concern the country, you can't act like children.
In the corridors of finance, the magic word "high-tech" works just like a magic spell: just say the word, and Aladdin's secret door - behind which incentives, tax breaks and benefits are hidden - opens immediately.
But in real life, certainly in times of crisis, the high-tech sector, which contributes only about 17% of the total Israeli GDP, begins to fade away - while the rest of the economy, whose share in the GDP is about 83%, is not productive enough because it does not receive the necessary incentives to exhaust production capacity his, and this is also the reason why he has difficulty increasing his contribution to growth.
The Arrangements Law, which has been added to the Budget Law since 1985, differs from most laws in that it groups laws and amendments to legislation on various subjects, and is submitted to the Knesset for approval as a single part.
It is designed to address structural weaknesses in the Israeli economy and society, and due to its expedited procedure, it allows for fundamental changes to be passed that would not have occurred if it had not been brought this way.
Also this year, we expected that one of the major structural weaknesses of the economy - a dual economy - would be addressed.
After all, on one side of this economy there is a competitive high-tech industry, which relies on advanced technological infrastructures and is export-oriented, and on the other side - industries, commerce and services with low productivity and a low technological level relative to most OECD countries.
An opportunity to encourage productivity
In the Bank of Israel's plan to accelerate growth in the economy, it was stated that "Too slow optimization of the branches known to the local market may have consequences for the well-being of the economy, and ultimately, also for the competitiveness of the exporting branches, which need inputs from the local branches. Therefore, it is important that the government's policy also focus on mediation about the market failures and the unique characteristics of the local trade and service industries, in order to encourage investments and the implementation of productivity-enhancing technologies in these industries."
Bank of Israel, photo: Oren Ben Hakon
The closing of the productivity gap will enable an accelerated growth rate, and will lay the foundation for responding to the deceleration trends in the short term and the next growth cycle.
But separate facts and separate reality: in practice, despite a high interest rate environment that makes money more expensive, which in any case creates a burden on the business sector, especially on investments, and despite the recognition of the structural weakness in the economy, it seems that the Ministry of Finance once again misses the opportunity to encourage productivity in a critical mass of industries that the state did not bother Cultivate the past.
The Law of Settlements submitted last week once again ignores the steps that will lead to growth, and therefore long-term structural changes must be made centered on increasing productivity.
Measures such as accelerated depreciation should be announced, the export criterion should be updated, the capital investment promotion law should be used more effectively so that it more correctly links entitlement to benefits with the industry's contribution to the growth of the economy, and the corporate tax should be reduced to 18%.
This will create immediate, equal and horizontal relief for all companies in all branches of the economy.
At the same time, the Class Actions Law, which is designed to protect the public's rights, has become a tool of extortion by a small number of lawyers who abuse the law, and it must be changed to restore the balance between civil rights and the abuse and the burden on the courts.
To encourage growth and prosperity of the economy, businesses need to be nurtured.
They are here to stay, because we have no other country.
The writer is the chairman of the presidency of the business sector in Israel
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