Israel’s economic leaders vowed to ease the burdens on small businesses on Monday at the Calcalist conference for Small and Medium Enterprises at Tel Aviv’s David Intercontinental Hotel. They promised to clear away red tape and reduce burdensome bureaucracy.
Economy and Trade Minister Naftali Bennett lamented the regulatory burden Israel put on its businesses, saying that an average business had to spend 235 hours a month, well over the amount a full-time employee puts in, just in dealing with regulatory requirements.
According to the World Bank, he said, Israel was ranked a pitiful 139th in ease of obtaining building permits, behind Algeria, Togo, the Palestinian Authority and Syria.
“Under Assad it takes 104 days to get a building permit. For us it’s 212.
Listen, friends, if I were in your shoes, I’d consider moving my business to Damascus,” he quipped.
Whereas the average OECD country has 12 different kinds of taxes to account for and pay each year, he added, in Israeli the number is 33.
Bennett said that only fraierim (suckers) would keep jumping through the hoops businesses had to go through just to survive, and yet, they are categorized the same as tycoons.
“Small and medium businesses are not tycoons, they’re the value producers of the state of Israel,” he said.
Aside from lack of simple access to information on steps required to start a business and comply with the numerous laws, Bennett also slammed environmental regulations.
Despite worthy aims, these make companies responsible for disposing of electronic devices and packaging even after they are delivered to customers.
“There are 700 criminal offenses in the environmental field,” he said. “Why do we put this onto small and medium businesses?” “I see myself as the plumber who is willing to stick his hands into places other people refused to, in order to clear up the blockages,” he said.
Speaking later in the day, Knesset Economics Committee Chairman MK Avishai Braverman (Labor) chided Bennett for not going far enough, saying, “I’m glad to hear you’ll be the plumber, but we need new piping.”
Braverman said the tax code needed an overhaul to be “simpler” (“like in the United States”) and get rid of exemptions that allowed big companies to pay minimal taxes. A Finance Ministry report released Sunday found that in 2010, Israel’s four biggest companies paid an effective tax rate of only 3.3 percent.
MK Nissan Slomiansky, who chairs the Knesset Finance Committee, said that Israel’s 450,000 small and medium businesses needed more access to credit, saying they only receive NIS 60 billion of the NIS 415b. in business loans banks given out each year.
That morning, Bank Leumi CEO David Brodet announced the creation of a NIS 3b. fund for small and medium businesses, and promised to make loans available to them within 14 days of application.
Eyal Biran, deputy director of Bank Leumi’s banking division said only 55% of small businesses survive their first two years.
“The network of tasks around business is complicated, including many components like human resources and technology, customer relations and more, and it’s increasing every year. But in addition to increases in the number of tasks, small businesses are forced to deal with a lack of time and money.”
Finance Minister Yair Lapid promised to help by cutting red tape, saying improved small businesses would help the working class. He also promised to go after overly powerful “pyramid companies, excessive concentration, aggressive tax planners and monopolies, because it’s bad for the working man.”
Alluding to possible future instability within the current government, Bennett seemed to put a 1 to 1.5-year timeline for taking action on policy.
“We are in a 70/70 government.
Why 70/70? Because 70% of the public agrees to 70% of the things.
In this government, instead of focusing on the 30% that we don’t agree on, we are focusing on the 70%,” Bennett said.
“I see a time period of a year, a year and a half, an opportunity to make these changes before the politics and so on close in on us,” he concluded.