The Bottom Line / Bibi the revolutionary
Netanyahu is making the economy more advanced, more competitive, more Western - even his biggest critics must admit that he is quite a successful finance minister.
Maybe we've already gotten used to it, but Finance Minister Benjamin Netanyahu is continuing to change the face of the economy. He's making it more advanced, more competitive, more Western - even his biggest critics must admit that he is quite a successful finance minister.
No minister before him dared to do to the bankers what he is doing. This week, he cut off their supply of big money: the provident and mutual funds. During the past 22 years, ever since the bank shares crashed, several finance ministers tried to carry out this revolution, but only Netanyahu has succeeded. Only he was truly determined. Avraham Shochat didn't want to and Silvan Shalom was "concerned."
Now, Netanyahu has to get the second and third readings of the income tax reforms through the Knesset, on Monday. The reforms include a gradual decrease of marginal income tax rates to 44 percent, a decrease of corporate tax to 25 percent and an increase in capital gains tax to 20 percent.
The Labor Party tried to topple the reforms in the first reading. Shochat hatched a plan wherein Labor ministers would absent themselves from the Knesset vote and the party's other MKs would vote against. But his plan went awry in practice, because some of the MKs recognized the absurdity of a party that sees itself as socialist opposing a tax decrease for workers and a tax increase for capital.
This important market reform comes on top of three equally important changes Netanyahu has initiated. The most important was encouraging a transition from living on welfare to working for a living. To do this, Netanyahu slashed welfare payments and child allowances while lowering taxes on labor and decreasing the number of foreign workers.
The second important reform was rescuing the Histadrut-run pension funds, and moving them to invest freely in the capital market.
The third was opening the economy's bottle neck - that is, dismantling the sea port monopoly and replacing them with three competing port companies.
But the work isn't complete. If Netanyahu wants to fully straighten the economy's bent back, he must complete split up the Oil Refineries and the Mekorot water company, and carry out three more structural reforms: in the Israel Electric Corporation, the defense industries and the Israel Airports Authority. And if that's the case, then perhaps he should serve as finance minister for another term?
Another tax and another fee
At the beginning of the week, the cabinet approved in principle the recommendations of the Sheinin Committee for the war on road accidents. An interministerial team will be established shortly to implement the committee's plan. Every year, some 510 people die on Israel's roads and an additional 2,500 are seriously injured, suffering pain and handicap throughout their lives. Traffic accidents also take a major financial toll. The issue is worthy of consideration, but is the committee's way the right one?
The Sheinin Committee determined that the anti-accident authority should receive an additional NIS 390 million, which would be raised by making drivers pay a fee equal to 9 percent of their compulsory car insurance. But it is a fundamental mistake to levy a new tax when the overall trend is to lower taxes. In addition, it's a mistake to levy a dedicated tax - because if that's the method, why is there no such tax to fund the health basket, or a specific tax to fund the disengagement?
And most of all: The Israeli driver is already being milked for taxes and fees that are several times higher than the amount invested annually in infrastructure and road safety improvements. So what's the logic of further milking people who are already being milked too much?
The disengagement is to cost NIS 8 billion. The cost of adding money to the war on road accidents is 5 percent of that amount. In other words, we have no financial problem. We have a problem with priorities.
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