Knesset Finance Committee recommends more aid for SMBs

Federation of Israeli Chambers of Commerce (FICC) and Manufacturers Association clash over government funding.

311_vintage store (photo credit: Alessandra Da Pra)
311_vintage store
(photo credit: Alessandra Da Pra)
The Knesset Finance Committee approved on Sunday a proposal to increase assistance to small-and-medium-sized businesses (SMB) in order to help them deal with deteriorating global economic conditions.
Committee chairman Moshe Gafni (UTJ) called SMBs the “anchor of the Israeli economy,” adding that many of them are in danger of shutting down or laying off workers as a result of the global economic situation.
MK Ruhama Avraham-Balili (Kadima), who co-authored the bill, said the state grants NIS 5.5 billion to industrial firms in the TA-25 group of Israel’s largest publicly listed companies, while on the other hand is considering raising taxes on small-andmedium- sized businesses, “who are actually the main engine for economic growth.”
“More than 430,000 small-and-medium-sized businesses are discriminated against, despite the fact that they employ around 55 percent of workers and contribute around 45% of produce. They are the main avenue for growth, and this is the reason that [US] President [Barack Obama] mentions the miracle of small-and-medium-sized businesses in every speech,” Avraham-Balili said.
She added that Israeli SMB owners deal with many problems, namely restrictive bureaucracy and heavy taxes.
In addition, she said the central bank is still increasing regulation, which means companies without enough operating capital will face a tough time surviving this current period of global economic downturn.
Ghaleb Majadle (Labor), who also co-authored the bill, said, “It must be remembered that 430,000 small-and-medium-sized business owners are first of all 430,000 families making a livelihood from these businesses and hundreds of thousands more workers hanging on their success.” Representatives for the Federation of Israeli Chambers of Commerce (FICC) and the Manufacturers Association – two bodies that often clash on economic issues – faced off over whose constituency was more deserving of funding.

FICC president Uriel Lynn said small-and-medium-sized businesses in the services sector suffer “serious discrimination,” while most of the support goes to the large industrial companies, who only employ in the “tens of thousands.”
Manufacturers Association representative Hezki Israel countered that there was no need to hurt those large industrial companies in order to assist SMBs as well, saying that there was room for both.
Finance Ministry Budgets Department representative Noam Stern said there was a range of grants available to SMBs, but acknowledged that currently around 80% of grants are awarded to large industrial companies. He said that he had heard grievances from many MKs who want more benefits to be given to the services sector rather than to the industrial sector.