Politicians agree on taxes but debate which to raise

Officials in many of the largest parties concede taxes will have to rise after the election.

An accountant calculator taxes 370 (photo credit: Ivan Alvarado / Reuters)
An accountant calculator taxes 370
(photo credit: Ivan Alvarado / Reuters)
Officials in many of the largest parties conceded on Wednesday that despite promises from Prime Minister Binyamin Netanyahu, taxes would have to rise after the election.
“The question is which taxes to raise and on whom,” former finance minister MK Meir Sheetrit of The Tzipi Livni Party said at a panel discussion at the College of Management in Rishon Lezion, which also included officials from Likud Beytenu, Labor, Bayit Yehudi, Yesh Atid and Am Shalem.
Netanyahu, he added, had foregone some NIS 75 billion in taxes from the upper classes to keep taxes down.
Labor’s MK Avishai Braverman said that corporate taxes were too low.
“Israel’s corporate tax rate is 25 percent. In Germany it’s 30%, in the US it’s 35%. Nothing will happen if we raise it 2.5%,” he said. He also called for increasing taxes on luxury products and lowering VAT on basic goods that make them unaffordable to the nation’s poorest sectors.
Yesh Atid’s Yaakov Peri, a former CEO of Cellcom and Mizrahi bank official, agreed on the luxury tax, saying that Mercedes buyers should pay double the tax rate of Subaru customers. He also said that part of the problem was a complicated tax structure, which had too many provisions allowing high-income earners to use loopholes. The tax authorities, including the National Insurance Institute, should be consolidated under one roof, he said.
Reuven Agassi, a hi-tech entrepreneur running with Am Shalem, said “the writing is on the wall” on tax hikes, but that he was more concerned about whether his taxes were being spent on growing the economy. In particular, he said, labor-force participation from the Arab and haredi sectors was crucial.
Sheetrit wholeheartedly agreed, saying that the nation was spending inordinate amounts on subsidizing people who do not work, namely haredim who are paid to study at yeshivas.
Although Peri concurred, he said it would take time to create the infrastructure to integrate those sectors into the army and national service.
“If they all wake up tomorrow and decide that they want to serve, we won’t be able to absorb them,” he said.
Bayit Yehudi’s MK Uri Ariel shot back that the government was dragging its feet on the issue, saying that above and beyond the “Nahal Haredi Battalion” (now actually the Netzah Yehuda Battalion and part of the Kfir Brigade, and not the Nahal Brigade) already in existence, there were three full battalionsworth of ultra-Orthodox who would be prepared to enlist, if only the IDF would call them up.
“We don’t need to prepare,” Ariel said, in a reference to Peri’s five-year integration plan. “There’s already been 12 years of preparation.”
Braverman and Peri agreed on a series of issues. Both said there was plenty of fat to trim in the defense budget.
“We need Iron Dome [the antirocket defense system], we need to fight the Iranians, but there’s room for cuts,” Braverman said.
They also both emphasized the importance of extending credit to small- and medium-sized businesses.
“Two-thirds of small businesses are closing within two years of opening,” Peri said ruefully.
Chaim Cohen, the CEO of Dun and Bradstreet Israel, which cosponsored the conference, urged the government to focus on cutting red tape to help the country’s 350,000 small and medium businesses thrive.
Echoing the damage control strategy of the prime minister and Finance Minister Yuval Steinitz, Finance Committee chairman Carmel Shama-Hacohen, of the Likud, offered few suggestions, but took the position that his party’s political opponents were exaggerating the economy’s problems and ignoring its significant achievements.
“You won’t find any black paint at Home Center,” he chided, because all the politicians had bought it to paint a dark picture of the economy.
The panel’s moderator, Globes editor Hagai Golan, responded right back that the politicians had no choice because the ruling party had already bought out all the rose-colored paint.