"There is no reason why a person should buy a Mercedes for NIS 400,000 in cash, unless he is a tax offender, and it's black capital," said Prime Minister's Office director general Harel Locker in the new edition of "Banking" magazine of the Association of Banks in Israel. "Part of the process will be the transfer of responsibility to the public. It will no longer be possible to carry out large transactions in cash, and get a discount at the taxpayer's expense. According to Tax Authority estimates, a quarter of the Israeli economy is black capital, and these are huge sums. We're not talking about a home renovator, but the top 1% too, in money laundering and other parties."
Commenting on the Locker Committee on Black Capital, he said that the problem had to be dealt with by restricting cash transactions and switching to debt and credit cards, and prepaid cards. "These means are barely used in the Israeli economy. We're talking about difficult changes in culture and perception to cause companies to stop using cash. We're not the first country in the world where this is happening. The entire world is moving toward a cashless society, and the goal is to reach it."
As for housing, Locker said, "We're in the process of approving 80,000 housing units, including 55,000 in high-demand areas, in 2013-14, and we intend to continue in 2015. The market is ultimately based on expectations, and these measures are beginning to trickle down to the market. It should be remembered that, until 2009, there was a policy of an absence of planning in central Israel as a government decision, and we completely reversed this decision.
"Municipalities are correctly demanding an expansion of infrastructures and education as a condition for increased construction. We've created a mechanism of blanket agreements and we've signed these agreements in several locations, such as Kiryat Gat, Modiin, and Rosh Ha'Ayin. When all the processes are connected, the Planning and Building Law at the Ministry of the Interior, which greatly speeds up the number of units in planning, the blanket agreements, and investment in infrastructures, there will be an effect on the market."
On another matter, Locker said that the Prime Minister's Office was drawing up a plan to reduce regulations. "One of the ways to improve regulations is to switch from a system of advance approval to retroactive approval. It's like the system in the US, where in many cases, there is self-regulation which requires you to meet very detailed standards. If you're caught violating the regulations, you'll pay a heavy price, but you're not required to undertake regulatory procedures every year, and you're not required to show ten different permits to ten people every year.
"We're making these changes in the environmental sector. The Israel Securities Authority is also cutting bureaucracy and regulation, and we're turning over every stone at many other government agencies to eliminate unnecessary regulation to switch to retroactive supervision."
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2014
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