The Finance Ministry is examining a broad solution for the over-concentration of power in the Israeli economy. It has held several sessions to study how to reduce the power of a small group of wealthy individuals and to increase competition, and discussed several recommendations.
These include limiting the operations of large holding companies, which are now allowed to hold both financial companies, such as banks and insurance companies, as well as other kinds of firms, such as factories.
The Bank of Israel also objects to such cross holdings, which it says increase instability in the economy.
One recommendation is taxing dividends paid by subsidiaries to their holding company owners, which are now tax-free.
The most major recommendation involves banning holding companies from owning financial companies: Owning both financial and non-financial companies gives their controlling shareholders too much power, by enabling them to direct financing toward - and away from - specific firms, in keeping with the tycoons' interests.
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