Steinitz praises Trajtenberg C'tee, not all recommendations

Finance minister calls on Defense Ministry to accept "moderate cuts"; Manufacturers Association chief: Proposals would "butcher" economy and business sector.

By NADAV SHEMER
September 28, 2011 04:48
3 minute read.
Finance Minister Yuval Steinitz

Finance Minister Yuval Steinitz_311. (photo credit: Reuters)

Finance Minister Yuval Steinitz said Tuesday that the Trajtenberg Committee for Socioeconomic Change’s final recommendations are “very good” and allow meaningful room for improvement in education and other social issues.

“The committee did well by recommending significant improvement without breaking the budget and without putting at risk the Israeli economy’s foundations,” Steinitz told Army Radio. But he said the report “would not be implemented word for word,” citing the section on ports privatization, which Steinitz said the government had already been working on for years.

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Steinitz also slammed the defense establishment’s opposition to the proposal to fund part of the socioeconomic program through NIS 2.5 billion in defense budget cuts, saying: “These are moderate cuts. Over the past decade the security establishment has received additional payments of NIS 100b... [Defense Minister] Ehud Barak said the security establishment would contribute to social change, and now he needs to stand by his word.”

The Trajtenberg Committee presented its recommendations to the government and the public on Monday, outlining billions in budget allocations over the next five years toward achieving socioeconomic change, the lion’s share of which will go toward education.

Federation of Israeli Chambers of Commerce president Uriel Lynn said in a press release that many of the committee’s key recommendations “were on the mark” and would help to ease the financial burden on the lower and middle classes. In particular, Lynn mentioned the proposals to open up the markets to importation, lower customs duties, tackle monopolies such as the Standards Institution of Israel and the seaports, and lower the gasoline excise.

“Reduction of the duties on foods and commodities will in turn lower their prices. This step of reducing protective tariffs correlates with a healthy policy of exposure that is the foundation stone of the economy’s development,” he said.

Lynn did express reservation, however, over proposals to raise the company tax to 25 percent next year – which he said would hit job creation and economic growth – and to expand the progressive income tax system.

“This recommendation does not provide an adequate answer to bridging inequality. It will only ingrain the mentality of receiving benefits, and will ensure the status quo is maintained,” he said.

Manufacturers Association chairman Shraga Brosh called the report “destructive to the business community and to the entire economy,” and called on the government to reject it. Soon, he added, the protesters’ chants of ‘the people want social justice’ will be replaced by cries of ‘will work for bread.’ “We expected that the committee’s economists would understand that harming the business sector would harm the entire economy.

The business community is the hen that lays the Israeli economy’s golden eggs, and Trajtenberg’s recommendations threaten to butcher that hen,” Brosh said.

“Trajtenberg, who proposes opening up the market to uncontrolled importation, which will hit the manufacturing sector hard, recommends funding this from irresponsible defense budget cuts – the meaning of which is a further hit on industry and on hundreds of factory workers in the periphery.”

Brosh reiterated his call for the government to convene a round-table discussion on Israel’s socioeconomic problems, and said the leaders of the business community would do everything possible to safeguard employment and maintain growth.

Histadrut labor federation chairman Ofer Eini said in an initial response Monday night that the report is “disappointing and does not address the chants that emanated from the mass demonstrations.” Eini promised to release a more detailed response to the Trajtenberg Report in the coming days.


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