In a letter Sunday to the 53 new members of Knesset, the Federation of Israeli Chambers of Commerce presented its five-year economic plan designed to boost the country’s gross domestic product, make the public sector more efficient, and cut government spending by NIS 10 billion.
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The letter was accompanied by documentation of an erosion in business sector revenues in recent years. The plan, drawn up by federation president Uriel Lynn, is based on increasing the proportion of people in the workforce, reducing the public sector and strengthening the business sector. The target is a NIS 200 billion increase in Israel’s annual gross domestic product, which in 2012 was NIS 929.7 billion.
“In the first phase, the government and the Knesset will need to deal with the problem of the [state] budget deficit, a topic which is of importance to the future of the economy, but the most important thing is to solve the problem in the short term, “ Lynn wrote to the legislators. “At the same time, consideration must be given now to how the Israeli economy will look in another five years and what the national resources will be at our disposal at the end of the period. I would say without hesitation if we present three achievable overriding economic goals, with a total commitment to their being achieved, we will be able within five years to increase the gross domestic product by no less than NIS 200 billion and reduce budget costs by no less than NIS 10 billion.”
Lynn said the country’s GDP per capita can be boosted primarily by increasing workforce participation, which he called Israel’s “Achilles’ heel.” This can be achieved through a return to workfare programs in which the unemployed are put to work, through targeted efforts among population groups that are underrepresented in the workforce, and by reducing government assistance payments while boosting government work incentives.
Once the gross national product is increased, he said, there will be resources for both social service and defense needs. Increasing taxes such as the corporate tax, income taxes on individuals and value added tax will not boost government revenues, he claimed. Instead it is enlarging economic activity that will do so.