The "Iron Swords" war shut down many businesses, which since Saturday/Sunday have been deserted - banquet halls, restaurants, gyms, street shops, hairdressers, beauty salons, independent service providers, such as psychologists, self-employed insurance agents, beauticians and many others whose income is based on public reception these days hardly work. Although the money does not come in, current expenses continue to decline.
Business owners with whom we spoke are crying out for help and asking the government to formulate an urgent aid package that will give them business certainty – first and foremost by stopping tax payments, such as municipal taxes, National Insurance, VAT, with the understanding that this is probably an ongoing event. Businesses are still seeking to find a solution for rent payments, loans and wages for their employees.
Business is deserted,
Some might say that it is too much to expect an aid package to be formulated while the war is still raging, but it was possible to prepare in advance with a solution that is activated automatically during times of crisis that the country has experienced quite a bit in recent years. Unfortunately, the "push a button" procedure that has already been formulated and discussed in the Economy Committee has not yet been approved. The procedure was supposed to provide immediate and automatic assistance to businesses in times of emergency such as war, pandemic and earthquake, despite the large number of military operations Israel has known and the coronavirus pandemic. Therefore, it seems that this time, too, business owners will have to wait a long time until the aid package is formulated and approved.
Next month I will have no income
Ronen Yessef, a pension insurance agent, got married a month ago. Since a state of war was declared, he has spent many hours volunteering in the Dan District in the fire department. "My main problem is uncertainty, people are not emotionally available to think about buying insurance today, and the main feeling on the home front is uncertainty. For this reason, I don't hold meetings or send proposals to the insurance companies. This means that next month I will have no income," he told Israel Hayom.
Ronen Yasef,
"Given the fact that tax payments are expected to drop next month, the issue is very stressful. A salaried employee will continue to receive a salary, but I'm still not at the stage where I can live off weeks without income," adds Yasef, concluding: "I understand that this is a long process that won't end in the coming days, and it's stressful."
Hila Hadar, an organizational consultant who deals with high-tech recruitment, told Israel Hayom: "The funds don't go into business. Few get money into them, most often not. But payments continue to decline – VAT, municipal taxes, and National Insurance. They download everything. Let them stop for a moment. And what are these concessions by the Tax Authority? We could have achieved this postponement of a few days on our own. Payments have already gone down at the bank, so you know, and we still need to go down for everyone."
Hila Hadar,
According to Hadar, what would have helped business owners who are not currently operating is that "to receive money from the state without restrictions and conditions, because everyone is hurt not as it was during the coronavirus or not to lower taxes such as VAT and National Insurance, and also to instruct the banks not to lower regular payments of loans, credit cards in a month's grace."
Hadar concludes by saying: "This is what is not talked about in this accursed war – we are the independents. Payments go down, taxes go down unhindered. My clients, are not in a mental state to work. They work, they don't work, they keep their children at home and keep them close to them and rightly so. What about the economic damage of every self-employed person in Israel?" she wonders.
"German unpaid leave"
Nir Sheffer, owner of an event hall and a member of the management of the Association of Event Halls, shares in a conversation with Israel Hayom that events for the near future have been canceled, there is no income and expenses continue to decline. It should be remembered that in the case of event halls, the fixed expenses are relatively high – employee salary expenses, space rental expenses, municipal taxes and more. According to Sheffer, the biggest hardship is workers' salary payments, but he says that the unpaid leave model that was introduced during the coronavirus pandemic must not be repeated.
"This time it is not allowed to do it in the style of unpaid leave like in the coronavirus, but to do it in the style of German unpaid leave. In other words, let the workers stay with us, the state transfers the money to you and you transfer it to the workers. If the war is long, we will be in tremendous distress. And again, we must not be in the previous unpaid leave model, it has dismantled our manpower, we are still licking the wounds from the coronavirus." Sheffer adds that the Association of Event Hall Owners donates thousands of doses every day to soldiers in the field, "We help first of all with what we can, but beyond that there is also the economic side that we want our businesses to stay on their feet."
National Insurance Building, Photo: Oren Ben Hakon
"In an emergency, he was caught with his pants down again"
Roi Cohen, president of Lahav (the Chamber of the Self-Employed in Israel), told Israel Hayom: "My main requirement is the "push of a button" procedure that provides immediate assistance to businesses in times of emergency such as war, pandemic and earthquake. I said that in an emergency he was caught again with his pants down. There should now have been a "push a button" mechanism that stops municipal tax payments, puts employees on unpaid leave, provides a solution regarding the amount of compensation to businesses for fixed expenses, and deferrals of advance payments. And everything is now hang-on-hang."
Roy Cohen,
They add: "Right now we will have to wait again until the war is over and then start discussions in the Finance Committee about compensation for those businesses and they are left in uncertainty and do not know what they deserve and what they don't. Their businesses continue to pay rent, continue to pay municipal taxes, loans."
Regarding the question of what Lahav is doing to help the self-employed, Cohen replied: "This evening we have a Zoom meeting with the Minister of Economy with the heads of the economic organizations that were harmed, such as the owners of event halls, such as restaurants, gyms, taxis, tour guides and all those affected by the war. As for the Finance Ministry, it seems that they are currently holding discussions within themselves. I sent materials to the minister and the director-general, or they are busy with other things, but at the moment there is no response from them. I saw that they were having discussions among themselves and that's what it looks like right now."
According to Ronen Gafni, owner of an organizational training business, "The contract between the Israeli government and its citizens has been violated in the safest possible way. The people are financing this war and will also finance the reconstruction of the country. The only mechanism currently operating as usual is the mechanism that takes our money, the most cynical in the world. This contract needs to be re-signed. I have no demand from the government, I don't believe any of their moves. We will finance this war from the gross and not from the net. All tax payments should stop until the people decide how to redirect it, not the government."
Significant erosion of business activity
Prof. Assaf Avrahami, CEO of Accountant: "As a company that provides ERP for organizations and businesses in Israel, we are identifying a series of dramatic changes that attest to the severity of the economic damage caused by the security flare-up in the south so far, which may yet spread to other sectors and exacerbate the situation."
"The use of systems, as a reliable indication of business activity in Israel, has dropped by about 30% since the outbreak of the war, with some businesses completely paralyzed. Another sign of significant erosion in business activity is reflected in a drop of about 70% of the inquiries we receive, indicating a significant slowdown in activity, in addition to a complete freeze in the entry of new businesses in Israel into the company's systems. It is important to understand that for the small-medium business segment, which has been dealing with a complex and challenging economic environment for over a year, this is a blow that dramatically undermines their already sensitive financial situation."
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