New incentives aim to spread out industry

Minister of Industry, Trade and Labor Ehud Olmert approved a tax benefit program to encourage companies to move their factories to the peripheries in an attempt to diversify the country.

olmert 88 (photo credit:)
olmert 88
(photo credit: )
Minister of Industry, Trade and Labor Ehud Olmert approved a tax benefit program to encourage companies to move their factories to the peripheries in an attempt to diversify the country. The Ministry said Tuesday that companies with large factories would receive exemptions from capital gains tax on land of up to NIS 112,500 per worker. To receive the benefit, the companies would have to buy land in the peripheries within 12 months of the law taking effect. They also would have to sell the land on which the old factory stood within four years of buying the new site and employ at least 60 workers at the new facility for a minimum of 10 years. Eli Aflalo, Deputy Minister of the Ministry of Industry, Trade and Labor, said the aim of the program was to reduce the social gaps between the richer and poorer areas of the country, although he denied it would destroy jobs in the center for the benefit of the peripheries. "The day after a factory leaves the center of Tel Aviv you'll see them starting to build offices and shopping centers in its place, which will bring more employment" he said in a telephone interview. Aflalo believes facilities that would move likely would be industrial factories, logistics centers and telephone support centers. He noted that, in the center of the country, 70 big factories employ more than 30,000 workers on sites owned by the companies that operate the facilities. He couldn't say, however, how many jobs he expected the program to create in the outlying areas. The plan comes in addition to several other initiatives the government is carrying out in its attempt to boost employment in the peripheries, including subsidizing employee salaries, providing 24% of the cost of investments in new factories, and offering other tax incentives. Thus far, however, Aflalo said the benefits have failed to solve the unemployment problem in the peripheries, which is why he is pushing this latest proposal. "All these programs have not succeeded in motivating factories to move to the peripheries. Only new factories have been built there," he said. Having approved the plan, Olmert has instructed officials in the Tax Authority and in the Ministry of Industry, Trade and Labor to prepare a legal memorandum so that it can be discussed by the cabinet.