Zelekha Blames Government for Exacerbating Slowdown

Former accountant general at the Finance Ministry urges the new government to formulate an economic policy before addressing the 2013 state budget.

Economic gadfly Yaron Zelekha on Monday slammed Prime Minister Benjamin Netanyahu's government for exacerbating the economic slowdown now underway with misguided tax policies.

"The government is strangling the economy with additional taxes just as it is trying to recover," he told a conference, referring to the package of tax increases approved by the government last summer.

Dean of the Ono Academic College business school and former accountant general at the Finance Ministry, Zelekha said on Monday that the way out of the economic crisis is by attacking concentration in business, keeping interest rates high and avoiding tax hikes.

He urged the new government to delay addressing the 2013 budget until it has formulated an economic policy.

"There is a lack of understanding that the budget is the outcome of policy," he told the conference. "If policy is flawed, the budget will have limited impact and entail harsh measures. With the right policies the deficit will close by itself and the budget will have room to grow substantially.

"Our economy is in a severe slowdown," said Zelekha. "The outgoing Finance Minister [Yuval Steinitz] told us the economy grew by 3%, the highest rate in the West. He forgot to say that he's comparing apples and oranges."

Zelekha said Israel did not enjoy the highest growth rate in the West because population growth in the West was on average 0.5% while in Israel it was about 1.7%.

He warned that the 2012 deficit pales in comparison to the projected 2013 deficit.

"The current government turned the economy into a paradise for oligarchs and plunderers, raised property prices, and buried the dreams of young families for years to come," said Zelekha. "The main thing that needs to be done is dealing with barriers to competition in every sector of the economy, like the committee I headed did in the automotive industry."

"The situation today is a recession caused by an organized attack on the purchasing power of the middle class, " he said, referring to income groups.

David Bachar