Netanyahu calls for 4-5% economic growth for a decade

“The only way to fund our security needs is through economic growth, not through excessive taxation," says PM.

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November 6, 2013 13:40
2 minute read.
rime Minister Benjamin Netanyahu gestures during his speech at the inauguration ceremony of a hi-te

PM speech gestures 370. (photo credit: REUTERS)

 
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Prime Minister Binyamin Netanyahu on Wednesday called for an ambitious amount of economic growth over the course of the next decade, saying that growth was the only way to fund Israel’s security challenges.

“We need to continue growing at 4- 5%, at a higher level of per capita income,” he said in a message to the Israel Democracy Institute’s Eli Hurvitz Conference on Economy and Society in Eilat.

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“The only way to fund our security needs... is through economic growth.

Not through excessive taxation, not through getting the money from someone else,” he added.

Fiscal responsibility was paramount, Netanyahu said, and growing the economy at 4-5% would be necessary to keep Israeli tax rates low.

Though GDP growth reached levels peaking around 6% over the past decade, in more recent years it has hovered in the 3-4% range, still among the highest in the Western world.

Netanyahu laid out three areas that he said could boost Israel to higher growth.



The first was investing in cybersecurity, an area that he said would necessarily dovetail on the growth of the Internet, and in which Israel had a competitive edge. The second was building transportation infrastructure, which could actually leverage the high real estate prices in the country’s center to push growth outwards. The last was growing new markets for Israeli exports, particularly in China.

Competition in all fields – whether government, business or capital markets – was important for innovation and growth, he continued.

Opposition leader Shelly Yacimovich blasted Netanyahu over his insistence on keeping tax rates from rising, arguing that maintaining corporate tax and high-income tax rates would result in more burdens on the country’s poor and middle classes.

“Does Netanyahu think that the figure released yesterday, that 50% of the workers in Israel earn a maximum of NIS 6,541, is the reality of an imaginary country? The prime minister must come back down to earth and understand that his citizens are collapsing under his policy,” she said.

In a prerecorded interview aired at the conference, incoming Bank of Israel governor Karnit Flug seemed to validate both perspectives.

“I think the main challenge for the economy is continued growth at a satisfying rate, while creating a situation in which the fruits of the growth will be more widely distributed to all levels of the population and contribute to reductions in poverty and inequality,” she said.

While it is up to society to decide what portion of the economy government should comprise, observing the trade-off between services and taxes, Flug said it was crucial to maintain fiscal discipline and bring down the country’s overall debt burden.

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