The Bottom Line / Crimes and criminals
At 10:30 P.M. last Saturday night, Finance Minister Benjamin Netanyahu received a surprising telephone call from PM Ariel Sharon, who informed him that a scheduled cabinet vote on cutting the budget was being deferred due to widespread opposition to the plan by Likud Party ministers.
At 10:30 P.M. last Saturday night, Finance Minister Benjamin Netanyahu received a surprising telephone call from Prime Minister Ariel Sharon, who informed him that a scheduled cabinet vote on cutting the budget was being deferred due to widespread opposition to the plan by Likud Party ministers.
Instead, two such ministers, Limor Livnat and Dan Naveh, proposed canceling child allowances for the top 20 percent of wage earners, an enticing populist solution that Sharon immediately adopted. He did so despite knowing that this is impossible, because the National Insurance Institute has no way of identifying that top 20 percent.
This non-existent solution is typical of Sharon's management style - no strategy, no order of priorities, just putting out fires. It was Sharon, himself, who, against Netanyahu's judgment, caved in to the army's pressure and decided to increase the defense budget. So how did he think this increase would be financed? With a magic wand that Netanyahu would suddenly produce?
But even if it were possible to identify the top 20 percent of wage earners, it would not be proper to cancel their child allowances. The child allowances, established in 1975 in lieu of tax deductions, are based on the theory that taxes should be determined by per capita income, meaning that larger families should pay less tax.
The talk of the "top 20 percent" is also inaccurate. The top decile contains almost no families with children under 18 because it takes time to reach the highest income bracket. Therefore, it will be necessary to take from the two deciles beneath it - and now we are already talking about the upper middle class, whose gross income is NIS 9,000 to NIS 13,000 a month, almost half of which goes to income tax, health tax and municipal taxes.
Shouldn't such people at least receive a symbolic return on account of their children? A mere NIS 122 per month per child? Is the upper middle class - whose members work hard all their lives, carry the brunt of Israel's tax burden, serve in the army and do reserve duty - not entitled to anything?
Moreover, Netanyahu wants to reduce the "fat man" - the public sector - and transfer more resources to the "thin man" - the private sector. But if less is cut from government ministries, less fat will be trimmed. And if instead the citizenry's disposable income is reduced by cutting child allowances, this will hurt the thin man - because people use their income to buy goods and services from the private sector. In other words, the Livnat-Naveh-Sharon plan will hamper economic growth.
The last-minute postponement of the vote, without prior coordination with the finance minister, seriously undermined Netanyahu's position. Sharon played a cruel trick: He signaled the ministers that they do not need to try to persuade Netanyahu because he, Sharon, is the decision-maker. That is exactly what Sharon did to Netanyahu's predecessor, Silvan Shalom.
Meanwhile, Netanyahu has struck back on a different front: He told Sunday's cabinet meeting that it was a "serious mistake" to destroy the portion of the separation fence east of Baka al-Sharkiyeh just as the hearings on the fence at the International Court of Justice in The Hague were starting. Such a move, Netanyahu said, makes Israel "look like a criminal trying to minimize his crimes."
Was it mere chance that Netanyahu spoke of crimes and criminals in his criticism of Sharon?