After last week's aberration, when he bent in favor of the consumer and against the cell phone operators (on the network interconnection charges), Ehud Olmert quickly returned to his old ways. He claimed there was no need to cut back on the state budget, but rather there should be more money thrown at the wealthy through "investment encouragement," grants for R&D, help in manufacturing, export subsidies and participation in paying wages.
And then the Industry Ministry approved Osem's expansion of its Sderot plant as eligible for state subsidy. Osem will set up a confectionery production plant in Sderot, and in return will be exempt from taxes. Every single one of us - even those earning just a few thousand shekels a month - pays taxes through gritted teeth. But Dan Propper and Nestle don't. They won't pay taxes and will earn millions. Just because they promised an extra 20 new jobs in Sderot.
Who could or would - Olmert certainly can't - check exactly how many new jobs we are talking of here? Maybe Osem will dismiss 30 workers at another plant where it is no longer viable to manufacturer candies? Maybe the company will just transfer workers from one plant to the other? And what happens when the plant wants to make efficiency drives and buys sophisticated new machinery that replaces the workers? And what will happen if Osem fails to meet its commitments?
To answer this we need look no further than what happened with Elite. In the mid-1990s Elite received a NIS 28 million grant on condition that it met a minimum export level. Now it appears that Elite did not meet this requirement, but instead of the ministry suing for its money back, it decided to waive the millions - because who wants to get nasty with Ofra Strauss? Now is her blood any thicker than Propper's?
Olmert's people say that although Elite failed to reach its export commitments, it does employ many workers. So really there is nothing left for us to do than to get down on our knees to Elite and say: Thank you, thank you, thank you for employing workers, for paying them the minimum wage, for agreeing to accept a state subsidy, but most of all, for being forced, as a result, to make millions and millions in profits. A million thanks.
If Elite had been asked to repay the NIS 28 million, nothing would have happened in the employment field. No worker would have been laid off, no production line would have closed down, because it does not affect the production's viability. Simply the Strauss family would have earned a little less.
All this system of the Investment Center handing out grants and benefits according to personal and flexible criteria is unfair, uneconomic, unethical. It contributes nothing to the economy and creates not a single new place of work. This corrupt subsidy distorts the allocations of resources, pushes companies into bankruptcy and creates waste of public expenditure that forces the government to cut back in truly important areas. The system makes the richer even richer.
If the government really wanted to encourage activity and employment, then it should simply close down the Investment Center, thus saving NIS 900 million, forcing the factory owners to give up playing games with the government and instead letting them get to work on the lathes.
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