Chambers of Commerce says hike in textile import taxes could cost public hundreds of millions.
By NIV ELISHistadrut chair Ofer Eini at Labor Court_311(photo credit: Marc Israel Sellem)
Following productive late-night meetings with Finance Minister Yair Lapid, Histadrut labor federation chairman Ofer Eini postponed on Tuesday a meeting to declare a labor dispute that would pave the way for a general strike after two weeks.Lapid agreed not to tax education funds, a red line for Eini, at a cost of NIS 2.5b to the state. Lapid also promised to include the Histadrut in discussions on the economic arrangements law and reforms for the ports and public services, Calcalist reported.The fate of NIS 2b. worth of wage cuts planned for public sector workers remained unresolved. One solution on the table was to simply postpone planned wage increases until 2015, which would save the treasury NIS 1b. Despite progress with the labor unions, however, a slew of other interest groups continued to mount pressure on Lapid to spare them from budget cuts.Labor MK Itzik Shmuli, complaining that the finance minister did not respond to his questions within the Knesset, posted a note on Lapid’s Facebook wall urging him to focus not only on hitting deficit and inflation targets, but also poverty reduction and inequality targets.“It’s not just and also not right that basic issues like raising taxes and changes in the transfers budget will be examined only through the prism of growth, and cut off from the consequences to the poverty level and damage to the social fabric,” he wrote.The Federation of Israeli Chambers of Commerce (FICC) came out against a planned 6% increase in textile import taxes, which the previous government had planned to reduce.“Canceling the reduction could lead to a 90% increase of prices on products that are passed on to the consumer,” said Yoram Dar, the FICC’s retail networks chairman.“We’re talking about a price increase that will cost the public NIS 600 million a year, where the primary victims are the middle and lower classes.”Meanwhile, the Jerusalem Institute for Market Studies (JIMS), an open market think tank, released a study that the corporate tax rate in Israel, at 25%, was higher than those of similar economies, which averaged 23.6%.“The one percent rise in corporate tax rate planned by the Finance Ministry will hamper economic growth more than cuts in the government’s budget or a rise in other taxes,” the report said.According to Ori Katz, who authored the study, “Countries with a large domestic market such as Japan, the US and France can afford relatively high tax rates, since corporations are willing to pay in order to be based near them. Countries similar in size to Israel opt for much lower corporate tax rates, and most of them have a lower rate than Israel.”On Monday, Deputy Defense Minister Danny Danon met with the head of the Israel Manufacturers Association in an “emergency meeting” over defense budget cuts, which they said would amount to NIS 6b. over the next two years.“We must prevent the irresponsible cuts to the defense budget,” Danon said. Cutting the defense budget, he said, would not only harm Israel’s security, but impact the economy.“The defense industry is the social and security might of the state of Israel,” he stated.Globes contributed to this report.
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