Kahlon proposes NIS 550 increase in elderly income supplements

22% of Israel's population live in poverty, according to the latest report.

BENJAMIN NETANYAHU and finance minister Moshe Kahlon. (photo credit: REUTERS/BAZ RATNER)
BENJAMIN NETANYAHU and finance minister Moshe Kahlon.
(photo credit: REUTERS/BAZ RATNER)
Finance Minister Moshe Kahlon on Sunday presented a plan to increase income supplements for the elderly, which will boost the annual incomes of some couples by as much as NIS 6,000.
“Seniors cannot earn on their own. We must help those who aren’t able to work,” Kahlon said at the weekly cabinet meeting, adding that it was the government’s jobs to both grow the economy and distribute the fruits of its productivity among those in need.
The supplement will take two forms.
The first will be increased welfare allotments for roughly 230,000 recipients, which will include housing assistance.
It will go into effect in January.
The second, which aims to encourage the elderly to continue working, is a tax credit referred to as “negative income tax,” also called the “earned income tax credit” in places such as the United States. Instead of charging low-income earners tax on their income, the policy adds government funds to their paycheck.
The Bank of Israel favors negative income taxes because they are efficient; they make it more worthwhile for people to work, don’t have complicated cost structures like other programs and are good at targeting those in need.
Kahlon’s policy would increase already-existing benefits for those earning between NIS 2,070 and NIS 6,800 a month by ranges of 6 percent to 13%. A couple under the age of 70, for example, would earn NIS 542 over their current NIS 4,164 each month, a 13% increase. A single person over the age of 80 would see their monthly supplement of NIS 3,016 increase 4.5%, to NIS 3,151.
“In our society the elderly are not a negligible component of the poverty picture, and what we will do will help reduce poverty,” Prime Minister Benjamin Netanyahu said at the meeting.
The announcement comes days after the release of the annual National Insurance Institute poverty report, which revealed that there are 1,709,300 people living in poverty, accounting for 22% of the population.
The report found that the poverty rate among the elderly increased from 22.1% in 2013 to 22.3% in 2014.
To combat this phenomenon, the report called on the government to adopt all the recommendations presented by the Committee to Fight Poverty, headed by Eli Alalouf. In June, the committee released its long-awaited recommendations totaling an estimated NIS 7 billion to implement.
This announcement marks the first realization of the recommendations presented – though the committee called for an allocation of NIS 600m. in its report.
The committee, tasked with making recommendations on the actions required by the state to combat poverty in all aspects of life, called to reduce the poverty rates by 40% to reach the OECD average of 11% within 10 years.
The only way to accomplish this goal is to adopt and begin implementing all the recommendations within the next three to five years, according to the committee.