Prime Minister Benjamin Netanyahu today said at the Caesarea Conference that taxes should not be raised on companies or the wealthy and that faster growth would achieve the necessary tax revenues. He also opposed raising the budget deficit, but said that the defense budget should be raised, which could be done by boosting the growth rate.
"Our security threat is like that of two great powers combined, but we don’t have the GDP of two countries, so the only way to finance our defense spending is through economic growth, not by overtaxing or receiving money from others," said Netanyahu.
"To achieve our collective security over the next 20 years, we need economic growth. We promised 4-5% growth a year, and we kept it. We must achieve this growth rate, there is no other option. It will provide our defense, social, and educational needs."
Netanyahu offered five ways to achieve faster economic growth. "Leverage technological capabilities. The Internet world is a running tiger. On the neck of this tiger is a small cat, cyber defense. It's impossible to develop the Internet without cyber defense. This is a need of countries, companies, and civilians. There is a strong need for this thing. Not only do we have clear relative advantages, but absolute advantages. We can become a cyber world power, and be one of the top three world leaders.
"The second subject is physical infrastructure. We still need to move people and goods. That is why we're building a network of railroads and roads. This is combined with expediting planning efforts to develop Or Akiva and Afula and Safed and to ease the high real estate prices in central Israel. These things will cause strong migration, which will bring about an increase in housing units and lower prices. This is a primary social tool. I want to create a bridge between Eilat and Ashdod.
"The third subject is the opening of new markets, including China. We must allow Israeli companies access to these markets. It's important to understand that most of the Chinese economy is controlled by government companies and government intervention is very important. They need healthcare services, infrastructures and clean water for hundreds of millions of people. I am also connected to another market: Latin America. It has huge potential because it wants three things: technology, technology, technology.
"Another subject is government underwriting and fiscal responsibility. We must keep the fiscal framework. We've succeeded in lowering our deficits and cut the national debt from 100% to 70% in under a decade. This means restraining government spending. We amended the fiscal law; this was not to my taste and was done with butterflies in the stomach. There are many supporters for increasing the government debt; that is a mistake. Obviously, you shouldn’t go too far with surtaxes."
On the fourth subject, Netanyahu said, "We must not raise taxes. Companies move because of tax issues. Populists claim that taxes should be raised on the rich. I have never believed this, but for political reasons we've sometimes had to go in this direction, but this is not our line. If there is 4-5% growth, you'll get the taxes you need.
"The fifth subject is competition and this is the most important thing. Real competition is a paramount economic and social tool. What prevents competition? Government concentration, followed by the Histadrut (General Federation of Labor in Israel), followed by government officials. But there is also cartel concentration by businesspeople. I believe in the business sector, especially in small business, but in every country there are cartels that work hand in hand with officials and the bureaucracy. I want competition, I don’t want monopolies, and if I privatize, I privatize for competition. I told this to Trajtenberg, I am trying to open the market to competition, both external and domestic. If monopolies and cartels control the market, there is no oxygen.
"These are the five points that will also narrow gaps. Dimona and Arad will not look the same in ten years. We have more things to do, such as education. This plan is right and it is possible, and I am committed to it."
Published by Globes [online], Israel business news - www.globes-online.com - on November 6, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013