Minister of Finance Yuval Steinitz was a guest of honor at the "Globes" 2012 Israel Business Conference yesterday in Tel Aviv. "Globes" editor-in-chief Hagai Golan directed his opening remarks to Steinitz, saying, "The macroeconomic situation is not easy, inequality has increased, the government has few tools or resources to deal with problems, and so forth. What economic policy should the Israeli government pursue?"
Golan presented Steinitz with a list of various tasks, and problems in the Israeli economy which ought to be fixed, and asked him for his opinion on the challenges. "What should we do?" he asked.
Steinitz sought to begin with other people's problems, which are also Israel's problems. "I recently visited Germany, and I saw there great concern about the fate of Europe. The same is true of the Israeli economy. There are achievements, but there are also challenges. As an export-oriented country, the global crisis strongly affects Israel, and it's not yet behind us."
Steinitz said, "Europe is still on the brink of collapse, the crisis is still there to stay and the talk is whether it's possible to avoid a total collapse. They're not talking about emerging from the crisis." He listed several countries and continents experiencing slowdowns, which he said were affecting the Israeli economy.
"There is now a large question mark - can the US resume strong growth soon, and can China maintain its growth rate? These two questions are relevant to both the global and Israeli economy, Four years ago, we thought that if we could hold on for two or three years, the world would recover, and we'd grow with it. But we're seeing that that hasn’t happened, and the global economy is far from recovering."
Yachimovich's plan will destroy the economy
Steinitz added, "I have not heard any growth plan from Yair Lapid or Tzipi Livni, but I have heard about something called an economic plan from Shelly Yachimovich. I want to say that Yachimovich's plan does not deal with economic growth or job creation. If this is her plan, it would be better if there were no plan at all. Her plan is a plan for economic destruction.
"I cannot remember any time in Israeli history when Israel's leader made promises to hand out benefits to the people to the tune of NIS 140 billion. The insult to the intelligence of the people of Israelhas reached new heights, and I must condemn Yachimovich's cynicism, which relies on most of the public not understanding economics.
"Who is Yachimovich attacking? The business sector. The rich. If she imposes such high taxes on them, it will lead to economic destruction - a severe recession and mass unemployment. I say it clealrly - Shelly Yachimovich is dangerous for the Israeli economy. Every gram of influence given to this woman in this Knesset is a danger to the Israeli economy, Israel's people, and jobs."
Steinitz continued, "Shelly Yachimovich proposes to raise the companies tax, which will result in lower activity and layoffs. Shelly proposes to raise the companies tax in central Israel from 12% to 30%, and to abolish the Law for the Encouragement of Capital Investment for big companies. This will destroy Israel's growth engine and cost tens of thousands of jobs of people in every walk of life. This is irresponsibility, and an attempt by Shelly to deceive the public."
"Shelly also proposes to tighten enforcement on black capital, which will generate NIS 35 billion. Apparently Shelly knows things that the Ministry of Finance does not, because we've already tightened enforcement. What is the basis for her proposal? How is it possible to scatter baseless claims, and then continue to appear in public as if nothing has happened?
"Shelly Yachimovich is the real danger to the Israeli economy. In both the cabinet and in the Knesset, I reiterate this. All her other proposals are not worth mentioning, so I choose not to raise them. It's necessary to show leadership and responsibility, and not to chase after populist declarations that have already brought down other governments in the world. That would be foolishness."
Steinitz continued, "Shelly even wants to raise the tax on the state's royalties on gas discoveries. She is playing with me. I raised it to 60% (the Sheshinksi law - Y.N.). She wants to raise it to 70%. All these things are irresponsible.
"Economics isn't a science, but the figures are science. According to the Gini Index, there has been a drop in inequality in Israel over the past three years of the Netanyahu government. It's necessary to keep fiscal discipline to maintain economic growth. We promised, and we'll meet, a deficit of 3% in 2013. If necessary, we'll take more measures, without the insanities like the ones proposed by Yachimovich.
"Secondly, it's necessary to continue to encourage investment, and thirdly to continue to increase haredi (ultra-orthodox) and Arab participation in the workforce. The final thing, we must bring gas from Israel's shores and generate profits for the state from it and lower the cost of electricity. If we do all these things, and we don’t listen to the crazy false promises of Ms. Shelly Yachimovich, we can swim against the global tide, continue to grow, and preserve Israelis' standard of living and jobs."
Published by Globes [online], Israel business news - www.globes-online.com - on December 10, 2012
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