"It's off the wall. No one understands why (National Economic Council head Prof. Avi) Simhon said what he did, and I'm trying to avoid using crude words to describe what he said. Prime Minister Benjamin Netanyahu was not in the room when Simhon made his remarks, and only at the end, when he said that the measure would make it possible to cut taxes, did he enter the room and express agreement. The prime minister did not hear that the price was firing 20,000 people in the high-tech industry," Israel Association of Electronics and Software Industries chairman Elisha Yanay said today in an angry response to the remarks by Simhon. "Thank goodness the economic establishment, including the Bank of Israel, Minister of Finance Moshe Kahlon, and the prime minister himself, do not think like Simhon. Nevertheless, he holds an important position, and we'll ask to meet with him and demand clarifications of what he meant."
The Association of Electronics and Software Industries yesterday published a sharp announcement about Simhon's comments, which were reported in "Globes," stating, "Halting foreign currency purchases is not enough for Simhon, nor even a fall in high-tech exports; he simply wants to shut the high-tech industry down. Simhon apparently believes that Israel should become a nation of salespeople and service providers, not a nation of producers and innovators and a light unto the nations in the high-tech industry, which has for years been dealing with global crises, an unreasonable shekel-dollar exchange rate, and more. The Bank of Israel's actions contributing to the weakening of the shekel against the dollar were what enabled the high-tech industry to compete against the entire world."
Yanay told "Globes" today, "The Israeli high-tech industry has 200,000 direct employees and 600,000 subcontractors, service providers, and more indirect employees. When Simhon talks about the discharging of 20,000 workers, 100,000 are actually involved. The average salary of a high-tech worker is NIS 40,000 a month, including social and pension rights. Each pays the state NIS 20,000 in taxes each month, half of what he or she earns. After Simhon sends these people to be sales assistants, masseurs, and other service workers, they'll stop paying taxes. Simple arithmetic shows that the state loses NIS 4.8 billion in taxes a year in this situation. That's sixth grade arithmetic, not a calculation by academics and professors," Yanay said.
He added, "If we add to this equation the employees who indirectly make their living from the high-tech industry, and who will lose their jobs, we're talking about a loss of NIS 15 billion a year in the state's tax revenues. Does Simhon realize what he's saying? Why doesn't he ask people at the Bank of Israel - wise people who understand something about economics?"
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2016
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