Tax cuts for poor favored in poverty battle

New Labor leader Amir Peretz has called for the minimum wage to be increased to $1,000 a month, although 63% of those questioned in the poll, which was carried out by the Geocartographia Institute, would prefer lowering taxes.

By YIGAL GRAYEFF
December 8, 2005 06:37
2 minute read.

A new poll shows that a majority of the public prefers cutting taxes for the weakest sections of society to reduce poverty rather than increasing the minimum wage, the Shalem Center think tank said on Wednesday. New Labor leader Amir Peretz has called for the minimum wage to be increased to $1,000 a month, although 63% of those questioned in the poll, which was carried out by the Geocartographia Institute, would prefer lowering taxes. Even a majority of respondents who said they paid a small amount of tax said cutting taxes was the better option. The poll was conducted in November and surveyed 500 people over the age of 18. Histadrut deputy spokesman Eyal Malma dismissed the study as "not serious," saying he doesn't regard the two options as being mutually exclusive. "I don't see any economic connection between raising the minimum wage and cutting taxes? What is the relationship between the two? It's possible to do both at the same time," he said. Ben-Gurion University president and former world-bank economist Avishay Braverman, who recently joined Labor, believes that a first step to reducing poverty is to enforce the minimum wage, a spokesman said. "After that we have to raise it [the wage] gradually and with the agreement of all the parties involved in the economy," he said, but declined to comment on Braverman's position on tax cuts. However, the Shalem Center's Professor David Levhari, who unveiled the survey in a paper called "The program for the war on poverty," warned that raising the minimum wage would increase unemployment. "The employer is obligated to make back the wage increases by ensuring an increase in productivity, and if this doesn't occur, he will be compelled to use outsourcing and [therefore] increase unemployment," he said. Levhari added that cutting taxes can lead to an increase in jobs and indicated that expanding the sources of finance available to companies would also help cut poverty. "Surveys point to the significant contribution of small- and medium-sized businesses to growth and the earnings improvement of the population lacking revenue and finance," he said.


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