"Don't allow yourselves the illusion that poverty in Israel isn't real. It is real," Teva (TASE, Nasdaq: TEVA) chairman Eli Hurvitz declared today. "The poorest 50% use 50% of their income for food. It is real poverty and we didn't invent it."
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Hurvitz spoke at the Israeli chapter of the MIT Enterprise Forum, at Tel Aviv University, which was devoted to business strategy and growth drivers.
He told of his joint proposal with the economist Dr Yakov Sheinin to lower VAT on food. "Lowering VAT by half a percent doesn't accomplish a thing," Hurvitz said. "We suggested that the government lower VAT only for the poor, leaving the rich aside: our proposal is to lower VAT to zero. That leaves 7% of the income of the poor and only 0.9% of the rich."
Seven percent of income is a great deal for an impoverished family, Hurvitz said. "You will not find a single issue that would impact poverty so greatly as this progressive tax. But the government did not accept our proposal."
VAT on food is much lower in the U.S., he said, and in Europe there is no VAT on foodstuffs at all, or lowered tax as in the cases of Hungary, the Czech Republic and Poland. "We always have to be last," he lamented.