Prime Minister Benjamin Netanyahu and Minister of Finance Israel Katz presented an economic plan this evening which they dubbed "Economic Safety net 2020-2021", meant to provide an answer to the economic difficulties caused by the coronavirus pandemic.
Netanyahu began by appealing for compliance with social distancing and hygiene guidelines designed to limit the spread of Covid-19. "I hear of plans to hold pirate weddings. Don't do it," Netanyahu said. "You can't trick the virus. We are banning weddings in order to prevent funerals. And don't gather in numbers of more than 20 people in one place. Research has demonstrated that when two people wear facemasks and remain at two meters distance apart, the risk of infection is negligible. If we keep to the guidelines, we will flatten the infection curve. But even when we do this, the curve will still rise because of existing infections.
"Now I want to talk about the economy," Netanyahu continued. "I'm attentive to the distress, I hear the cry, I'm taking to you on Zoom, candidly. I see before me the restaurant owner, the falafel seller, the hairdresser, the cosmetician the taxi driver, and the artists and performers. At the start of the crisis we provided incentives for getting people back to work. At first there were failures of earlier plans and chronic bureaucracy, and some of the delays are still with us. We have therefore instructed the Tax Authority to expedite checks for business owners who have still not received money.
"Our guiding principles are certainty for the next year, speed in transferring the money, and immediate grants for the self-employed."
Netanyahu described efforts that had been made to overcome bureaucratic and technical problems in implementing aid programs, and he called on Blue & White leader Benny Gantz to cooperate on a budget until the end of this year. "All the economists without exception told us to pass a budget quickly until the end of the year, pause for breath, and see what happens before the next budget," Netanyahu said.
Minister of Finance Israel Katz opened by saying, "We are presenting a program with a direct budgetary cost of NIS 50 billion, and another NIS 30 billion in loans. All of this money is going to flow to you, citizens of Israel. The plan we have formulated is for one year forward, the reason being the basic assumption that the coronavirus will be with us for a year, until, we hope, a vaccine is found.
"In this program, lessons have been learned from the programs that have been with us since the start of the crisis."
The main point of the plan is a safety net for salaried workers on leave without pay. They will receive enhanced unemployment benefit immediately and until June 2021, directly to their bank accounts, without them having to take any further action. Qualifying periods for receiving unemployment benefit will be cancelled.
Entitlement to unemployment benefit will be tied the rate of unemployment in the economy.
The second plank of the program is extension of the safety net for self-employed people and business owners whose turnover falls by 40% or more. Every two months until June 2021, such businesses will receive a number of grants, depending on their monthly turnover. A business will be able to receive a maximum of 14 grants paid in seven payments.
The grants will be on two levels. A business with an annual turnover of up to NIS 300,000 will receive an assistance grant of NIS 15,000 every two months. A business with a turnover of between NIS 300,000 and NIS 100 million will be entitled to a grant to cover fixed costs up to NIS 500,000 every two months.
Business owners whose annual revenue does not exceed NIS 640,000 will be able to receive an additional grant of up to 70% of the their monthly revenue or NIS 15,000 (the lower of the two) if they prove that their monthly revenue has fallen by at least 15%. Businesses with turnover of up to NIS 300,000 will also receive bi-monthly grants of between NIS 3,000 and NIS 6,000, in addition to the bi-monthly salary grant.
The state will also a municipal rates grant or a refund of municipal rates to businesses with a turnover of up to NIS 100 million whose activity has fallen by more than 60%, until the end of June 2021.
The state will also expand its program of state guaranteed credit for small businesses by NIS 23 billion to NIS 45 billion. Additional steps to aid businesses include deferment of mortgage and loan repayments until June 2021 and cancelation of the need to renew business licenses until that date.
The state will cancel the tax penalty on withdrawals from advanced training funds before six years are up for withdrawals of up to NIS 10,500 monthly. Cancellation of the tax will be for six months.
The new aid program also includes measures to stimulate economic growth. Among other things, professional training will be expanded to 50,000 training places annually, with the aim of enabling people who have lost their jobs to return to the workforce rapidly and obtain high-quality jobs and of raising productivity in the Israeli economy.
Among other measures are continuation of the program of expedited investment in infrastructure; removal of restrictions on the drawing down of grants for those who completed their compulsory military service within the last five years; special assistance for senior citizens and disabled people.
On the health front, the program includes steps to reinforce epidemiological investigations, and to assist people in quarantine and in lockdown.
The program comes after widespread public criticism of the previous aid programs presented by Netanyahu, Katz, and previous minister of finance Moshe Kahlon, that they were inadequate and that the assistance did not reach those who needed it.
Meanwhile, however, there is still no government decision on the state budget for 2020 and/or 2021, with the Blue & White party continuing to demand that a budget should be passed covering the period to the end of 2021, with an exit point in January 2021 for amendments.
Israel Manufacturers Association chairman Dr. Ron Tomer said in response to the program announced this evening, "This is an important change of direction by the government, which for the first time has taken full responsibility for the event and promised a safety net for the citizens of Israel. All the same, as employers' leaders told the minister of finance today, support for the business sector should be expanded substantially to guarantee jobs for those who have dropped out of the workforce and to consolidate stable growth and employment engines for the coming year."
Published by Globes, Israel business news - en.globes.co.il - on July 9, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020