Knesset Committee Urges Repeal of Tax on Hiring Migrant Workers

The repeal could deprive the state of $138 million, but the panel says the tax has failed to get a single Israeli to work in agriculture or construction

Hagai Amit
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Asylum seekers protesting outside the Supreme Court over a law requiring them to deposit 20 percent of their salaries into a special fund, Jerusalem, January 26, 2017.
Asylum seekers protesting outside the Supreme Court over a law requiring them to deposit 20 percent of their salaries into a special fund, Jerusalem, January 26, 2017.Credit: Emil Salman

The Knesset Finance Committee on Monday urged the repeal of a tax levied on employers of migrant workers, despite warnings by the Finance Ministry that the move would deprive the state of 500 million shekels ($138 million).

During a hearing Monday, the members agreed with employer representatives that the tax should be repealed. They also agreed, however, that there was possible overlap between migrant workers and asylum seekers, whom they referred to as infiltrators and whom the government seeks to expel from Israel.

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In any case, they concluded that lifting the tax would not increase the number of illegal migrants in the country.

The tax ranges between 10% and 20% of the wage paid migrant workers, also referred to as foreign workers, depending on the industry.

“There are many workplaces in Israel, and unemployment rates are lower than ever. Israelis can be choosy about where they work,” said MK Miki Zohar (Likud).

“The ones willing to do tough jobs are actually the foreign workers, so this tax has missed its target. At the end of the day, this levy doesn’t burden employers but rather us, all Israelis. The employer will raise prices as a result of it.”

Zohar added, “When we talk about increases in the cost of living, this is a perfect example of the way we could lower the cost of living by repealing this tax.”

MK Moshe Gafni (United Torah Judaism), the committee chairman, said it was clear that the tax should be repealed. “I will seek a bill repealing the employers’ tax in the restaurant business, agriculture, construction,” he said.

“This tax is totally unnecessary. It didn’t achieve its target. It exists to encourage Israeli workers to enter these industries, but no Israeli has started working in agriculture or construction because of this tax.”

Shraga Brosh, president of the Manufacturers Association, said that after deporting migrant workers, the state was looking to bring them back.

“There are 2,000 foreign workers after they conditioned their arrival on employers paying the levy,” he said. “We are in a situation today in which you’ll bring in workers at any price, and they’ll take them. The idea of levying a tax so we won’t bring them in is bankrupt.”

Aviad Schwartz, who represented the Finance Ministry at the hearing, estimated that the repeal would cost the economy 500 million shekels.

Committee members refused to accept this estimate. “If there are 40,000 infiltrators, and I subtract from this number women and children, I get to 150 million shekels,” MK Mickey Levy (Yesh Atid) said. “They’re scaring me with a half-million-shekel budget hole.”

Committee members insisted on separating the issue of migrant workers from asylum seekers. “I demand increasing the quota for foreign workers in the restaurant business, nursing and construction and to keep discussion of this matter separate from the infiltrator issue,” Levy said.

“We will try to do this immediately in the restaurant business. We need to bring in foreign workers, and to cut off the need for them. I want to drop the ideological discussion on infiltrators.”