Some 380,000 self-employed people hurt by the coronavirus crisis got the much-awaited first installment of their bimonthly government grants on Monday, as has been repeatedly promised by Prime Minister Benjamin Netanyahu. But many were disappointed by how little they got.
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The grant, ostensibly paid to any self-employed person whose income has dropped by 40 percent or more, can run as high as 7,500 shekels ($2,180). But 116,000 Israelis got 3,000 shekels or less, another 136,000 got between 3,000 and 7,500 shekels and only 128,000 got the maximum amount. And the next grant won’t be until August.
The grants are supposed to cover 70 percent of a self-employed person’s reported business income, just as unemployment compensation covers 70 percent of one’s salary. The Tax Authority said this was just the first installment, and if payments were too low, the balance will be made up later.
But for many people, that was little consolation.
Odelia, 39, of Tel Aviv, runs festivals and events. “I’ve worked nonstop since age 14, but now I’ve been home since March; all my events have been canceled,” she said, adding that her savings had run out, and the 3,340 shekels she received isn’t even enough to cover the rent on her apartment, which is 4,000 shekels a month.
“I’m 39, and I have to go live with my parents,” she added bitterly. “I have no way to support myself right now.”
To buy groceries, she borrowed 320 shekels from a friend. Moreover, she said, as a self-employed person, she has to pay value-added tax on the grant. She also has to make payments of 1,100 shekels a month to the National Insurance Institute, even though she’s not earning anything.
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“That’s what those 3,000 shekels are worth to me – they’ll go back into the state’s coffers,” she said. “So thanks for the loan, but no thanks. Because for me, this is a loan, not a grant.”
Odelia has been in business for a long time, but Moshe opened his bar in Tel Aviv only in late 2018. He invested a lot of money in it and didn’t withdraw his salary for the first few months. On Monday, he got just 1,400 shekels from the state.
Both Odelia and Moshe said that had the grants been based on their 2019 earnings rather than 2018, they would have gotten much more. “I sent emails, my accountants also sent emails, but there’s no one to talk to, it’s an automatic computation,” Moshe said. “There’s no way to appeal.” He’s now looking for other work, he added, because nobody can subsist on the grant unless their parents help them.
Noam, an office designer from Tel Aviv, said his story is “particularly upsetting.” He will get exactly zero from the state.
In 2018, he explained, he was both employed at a firm and self-employed, but most of his income came from his paycheck; only a few thousand shekels came in through his business. Then, in 2019, he switched to doing all his work through his own business.
Since he’s no longer an employee at a business, he isn’t entitled to unemployment benefits. But the grants for the self-employed are based on “business income” rather total income, and his business income in 2018 was negligible. Thus, even though his total income has fallen by 80 percent over the last four months, he won’t get anything from the state.
“So far, I’ve burned through tens of thousands of shekels of savings,” he said. “In late May, I luckily managed to obtain a few small freelance projects. It isn’t earning me enough, and it’s certainly not covering the damage. But it’s keeping my head above water, and of course, definitively ends any chance of my getting something from the state.”
Erez Yaakobi, a radio broadcaster, opened Habulgari, a Balkan café, in Haifa in December 2019. He intentionally kept the business small to minimize risks, but it initially looked promising. It started to attract a regular clientele and had many satisfied customers. But the good times didn’t last long.
When restaurants were closed at the start of the coronavirus crisis, Habulgari quickly moved into takeout, even though that wasn’t something Yaakobi had planned for. Had the lockdown continued for another month, “we wouldn’t exist,” he said. “But we managed to keep afloat. We’re a small place, and that helped.”
Yet so far, the self-employed grant hasn’t helped him at all. Having opened only in 2019, he’s not eligible.
“Now they’ve said, okay, we’ll help new businesses that started in January and February. But what about us, with December, October and November?” he demanded.
“I can’t understand what they’re doing,” Yaakobi continued. “There are 1,000 criteria. Every time they set criteria, people fall through the cracks, instead of them learning from other Western countries, where they simply gave support to businesspeople without asking how much and why and where.”
On Monday, he got a notice from the Tax Authority, but hasn’t yet been able to log onto its website to find out what, if anything, he’s getting. “I hope I’ll get something,” he said, not sounding very hopeful.
At first, he continued, “I had great expectations. I was sure the government would be there for me. But it wasn’t. I was angry, and at some point, I realized that it all depends on me.”
Postponing VAT payments didn’t help him, he said, nor was the discount on municipal taxes significant. “If I collapse, nobody will help me. All that’s left for me to do is hope the government won’t close my business again, because at the moment, things are going well.”
Doron Sheffer, 46, worked for years as a reporter for the Israel Broadcasting Authority. In May 2017, he opened his own business as a content editor and media consultant, but also continued working as a salaried employee until August 2018. Thus for much of 2018, around 80 percent of his income came from his salary rather than his business.
His partner, graphic designer Lihi Bar-Haim, is also self-employed, but she spent most of 2018 at home with their baby. Thus her business income that year was also much lower than normal.
“I heard [Finance Minister] Yisrael Katz say, ‘We’ll make sure that not a single self-employed person whose income was harmed will be left without compensation,’” Sheffer said. “Well, here are the two of us.”
Sheffer said he understands the logic of paying compensation based on 2018 rather than 2019 when the payments first started. Many self-employed people hadn’t yet filed their 2019 tax returns, whereas 2018 returns had all been filed.
But by now, he said, “everyone has filed their 2019 returns,” so there’s no reason not to base the compensation on 2019 instead.
“Moreover, they didn’t base it on income, but on taxable income, which means income minus your expenses as a self-employed person,” he added. “That’s a further blow.”