Opposition presents alternative to austerity measures

United Torah Judaism and Meretz have teamed up to propose tax hikes on the rich, higher royalties on natural resources, and fewer tax breaks for corporations.

MK Moshe Gafni (United Torah Judaism) and MK Zahava Gal-On (Meretz) have teamed up to present an alternative austerity plan to the plan of Minister of Finance Yair Lapid. The opposition's plan includes NIS 12 billion in revenues from raising royalties on natural resources, taxes on empty apartments, and tax hikes on large corporations. Gafni and Gal-On say that their plan will generate NIS 43 billion in revenues, without touching the middle class.

At the same time, Labor Party chairwoman MK Shelly Yachimovich published a list of possible revenues sources, which she claims will raise NIS 13.6 billion. They include cancelling some of the tax breaks on corporations, applying the Sheshinksi formula on profits on natural resources from the Dead Sea, income tax hikes on the top 1% (instead of tax hikes on the middle class), and collecting some of the trapped profits.

In a press conference, Gafni and Gal-On said that their plan tackled aggressive tax planning, which would generate NIS 3 billion; returning natural resources to the public and raising royalties, which would generate NIS 12 million; reducing the tax breaks under the Law for the Encouragement of Capital Investments, which would generate NIS 5 billion, establishing a government housing plan, which would generate NIS 120 million, and taxing empty apartments, which would generate NIS 1 billion; an alternative package to the "Lapid-(Histadrut chairman Ofer) Eini plan" to strengthen the middle class and reduce contract employment, establish a differential companies tax, which would generate NIS 3.5 billion; a capital gains tax hike, which would generate NIS 1.35 billion; adding an income tax bracket, which would generate NIS 900 million; and a real NIS 3 billion defense budget cut.

"A top Ministry of Finance official told me that they finally found a sucker who would achieve all their decades-old dreams," said Gafni, the former Knesset Finance Committee chairman. "We're presenting a worthy alternative for dealing with the deficit without hurting the poor. The public should know that there is another way, and that Lapid deliberately chose to hurt the middle class and the poor. We demand that the government adopt the social-economic program which will prevent the continued collapse of Israel's workers and poor."

Gafni added, "Besides the fact that the plan we are presenting will generate tens of billions of shekels in revenues, and not from the pockets of Israel's people who struggle to make ends meet, this corrects economic and social distortions, which the government should implement. Instead of cutting and harming Israel's poor, the government should seek alternatives and this is one of them."

In an attack on Lapid's budget, Gal-On said, "Lapid's economic plan is an awful plan, which harms the middle class, brutally crushes the poor, and shatters what remains of the welfare state. Lapid chose the easiest and most harmful measures which can be passed without confronting the tycoons and special interests, and without having to get entangled in genuine reforms."

Yachimovich also listed several alternative revenue sources to reduce the burden on the middle class. They include halving the tax breaks for corporations, which will generate NIS 3 billion, which she would use to help small and mid-sized companies; applying the Sheshinki formula on natural resources, which will generate NIS 1.6 billion; raising the income tax on the top 1%, which will generate NIS 1.7 billion; collecting part of the trapped profits, which will generate NIS 3 billion, and an estate tax on inheritances of over NIS 15 million, which will generate NIS 1 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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