Federation of Israeli Chambers of Commerce president Uriel Lynn has sent an urgent letter to Prime Minister Benjamin Netanyahu, in which he warns against nationwide implementation of the negative income tax. "If we apply the negative income tax in Israel, it will be a disaster for generations. It will be a big mistake for which the entire country will pay a very high price," he wrote.
Lynn added, "Fundamentally, the negative income tax is a welfare payment to low-income earners. The workers are turned into welfare recipients. This is liable to encourage people to file partial returns that do not correctly reflect their income, and it will become a new source of welfare that rewards untrue reports. The result is that a worker who is eligible for an honorable livelihood turns into a worker who is supported by government handouts.
"The negative income tax will be a sad reversion to the historic error of the child allowance."
Lynn advised Netanyahu to embark on a new and simpler path to increase the disposable income of low-income earners: cut direct taxes. "It can be shown that in the five years 2004-08, the direct tax burden was reduced by NIS 400 for people earning NIS 5,000 a month. This increased disposable income at this salary level by almost 10%," he concluded.
Published by Globes [online], Israel business news - www.globes-online.com - on April 1, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009