Trajtenberg - Tomer Appelbaum - 26092011
Prof. Manuel Trajtenberg last month. Photo by Tomer Appelbaum
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Even before they heard the end, even before they studied the conclusions, the tent protest people announced that the Trajtenberg Committee had disappointed them, that the system had not been changed.

But Prof. Manuel Trajtenberg is not Che Guevara - although he is from South America. He believes in a market economy (luckily for us ), but wants corrections to reduce gaps and poverty; he also wants to improve things for those who work hard but don't have enough money to finish out the month.

Someone should explain to the tent protesters that we have security problems that no other country has, as well as a large non-working population. Therefore, we will never be Sweden. That might be disappointing, but it is the truth.

The great revolution of the Trajtenberg Committee is not about the budget. We have moved funding from defense to education before - in 1992 under the Yitzhak Rabin government, for example. The great revolution involves competition. The committee came to the conclusion that the low level of competition in the economy is the cause of the intolerably high cost of living that brought out hundreds of thousands of Israelis into the streets.

To solve the problem, the committee recommends drastically lowering import duties, allowing imports without torture by the Standards Institute of Israel, and greatly reducing anti-dumping duties - a customs tax imposed on an imported product that unfairly competes with domestically made products price-wise.

Take the strong and rich cement monopoly, Nesher, for example: It is absurd to protect Nesher from imported competition when we want to lower the price of apartments and cement is a significant component in construction costs.

But powerful vested interests will do everything they can to protect their huge turf. To them, Trajtenberg said yesterday: "Embrace the change."

But of course, they did not listen.

Manufacturers will scare us with increased unemployment if import restrictions are eased. Farmers will say duties must not be lifted from agricultural produce or they will abandon the land and foreigners will take it over. The Histadrut labor federation will argue against the recommendations in the name of the large workers' committees.

But the truth is that competition should have been dealt with a long time ago, and the social protest simply provided the opportunity.

Another example is the Standards Institute, which invented a special Israeli standard for every product, as if the European and American standards were not good enough, so Israeli industry can charge high prices for its products.

The Trajtenberg Committee is right to make do with the foreign manufacturer's declaration that the product has a European or American standard. This will shorten processes, lower costs and bring down prices.

The committee hardly touched an area in which duties are huge - fresh produce. Apparently, it was afraid of the agricultural lobby. Therefore, we will continue to suffer high prices in this field.

Having pledged to accept the recommendations, Prime Minister Benjamin Netanyahu will have to swallow his pride and accept a move he heartily opposes - raising taxes. The proposal is not extreme: raising marginal tax by 3 percent; a surtax of 2 percent on the rich; an increase in corporate taxes of 2 percent; and a capital gains tax hike of 5 percent.

Some taxes will go down: For the first time, a man will receive tax credits for his children under 3 years of age; people who earn less will enjoy higher negative income tax; the 12-percent National Insurance and health tax on incomes of NIS 40,000 to NIS 72,000 will be abolished; purchase taxes will be reduced; and excise taxes on fuel will not be raised. In other words - more direct tax and less indirect tax; exactly what the protesters wanted. But they are not satisfied.