Kfir Batat, deputy head of the Finance Ministry's budget department, spoke on Thursday about the cost of the war and the double burden on taxpayers and reservists: "This war must be financed. The attempt to escape priorities and stick to slogans will cause much greater damage to the economy in the medium and long term to the business world, and increasing the damage will meet us head-on." The remarks were made at a discussion held by the Israel Democracy Institute and the Employers and Human Capital Administration.
According to Batat, "In order to finance the security burden, changes in priorities are required – raising taxes or cutting expenses, that's the direct cost. The expectation is for an increase in the burden on reservists, which creates a very large burden on the business sector and on households. The problem is that taxpayers and reservists are largely the same population. The situation must be a priority, the state must understand where it needs to cut so as not to impose an excess burden on taxpayers. The overlap among the affected population stems from the fact that large parts of the population do not share the burden of participation in the labor market."
The war must be financed. Bank of Israel, Photo: Oren Ben Hakon
"Markets will lose confidence"
Batat added: "The demographic outlook is very clear. We know how much will participate in the labor market 20 years from now, if we don't bring the same populations into the labor market today with high productivity. We have to ask ourselves what kind of economy we will be with – an economy in which declining rates are taking part in the job market if we don't make the change in priorities we need? Or we will find a way to make the difficult but right decisions. To balance the deficit rate back in the medium to long term, and to bring about that in 20 years we will have the same populations participating, shoulder to shoulder with the other population on whom the burden now falls."
Prof. Karnit Flug, Vice President of the Israel Democracy Institute and former Governor of the Bank of Israel, commented on Prof. Avi Simhon's proposal: "The statements to waive the 2024 budget are extremely irresponsible. If we do not conduct ourselves by internalizing the event, changing priorities to support the fighting, the business sector and growth engines, and not things that are harmful even in normal times, the markets will lose faith in us."
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