What initially looked like a simple increase in the VAT tax to 17%, now looks like it will probably become a much broader plan.
The Finaince Minister, Yuval Steinitz, in coordination with the Prime Minister, is working on a plan to raise money, as the government collected less tax monies than expected this past year. The plan to raise money includes the possibilities of increasing the VAT to 17%, raising taxes on various items like cigarettes and gasoline (among others), raising the income tax, cutting some health services, cutting dispensary budgets, increasing corporate taxes, and more. (source: Ynet)
Such a tax plan looks like it could be devastating to the citizenry. I am sure their economists have showed them how this will increase spending and production and employment thereby raising money for the government, bu tit looks bad on the face of it. Raising corporate taxes will force layoffs, as it gets more expensive to operate the business. Increasing income tax will make it difficult for the average person to finish the month respectably, increasing other taxes like VAT and some consumer products will make everything more expensive to buy especially considering people will have less disposable income due to income tax hikes, etc.
Foreign Minister Avigdor Lieberman, weighing in on a number of issues, says that he opposes such a plan that includes raising all these taxes. Lieberman says that the government should simply cut non-productive subsidy handouts, such as the kitzvat yeladim, the dispensation for having children. Dispensary budgets that are targeted toward increasing productivity should remain, but dispensations that are just handouts should be cut rather than raising taxes. (source: Ynet)
Lieberman will likely be attacked for this suggestion as being anti-Haredi, as large families benefit the most from such dispensations like the child allowance, and Lieberman's suggestion would make them the primary victims of these cuts. Is he? Is he not? Is he finding an easy place on to which dump the countries problems or is he finding a way to save most of the people from suffering the situation? I don't know, but there is a certain logic to cutting unproductive dispensations rather than raise taxes again.
of course that means you think paying for people to have children is considered unproductive. Some will say it is the most productive thing there is!
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I like Lieberman's style: Don't just raise taxes, but take a good look at where the government is spending money now and make cuts where possible.
ReplyDeleteWhile cutting the child benefit completely would harm families blessed with many children, if the handout became 'means tested' it would go only to those who need it most, and the wealthy families who have been enjoying the 'freebie' can learn to go without.
Which MK is going to be brave enough to suggest that the knesset could also take a good look at their own salaries and benefits and make some cuts there...?
Rafi,
ReplyDeleteI had a conversation with someone once where I said that the child allowance is unfair because it is a handout to the charediim at the expense of the secular.
The other person, for the sake of this conversation let's call him Rafi, said, 'no, it's not for the charediim at the expense of the secular, it's a rate the gov't pays out and the secular are welcome to have more kids and get a larger allowance too."
so now that someone in gov't is talking about cutting the allowance it becomes anti-charedi?
I think the time has come for people to wake up and realize what the culture of poverty is doing.
ReplyDeleteThere are entire segments of this country who don't work (bshitta), receive hefty tax breaks and receive kitzvat yeladim as well.
This puts the tax burden on those who can least afford it..the working class.
Perhaps Lieberman is correct...let's take a look at those who could be working and paying taxes and aren't.
Way - I did not say it is anti-haredi. I said he will be attacked as if it is anti-haredi. and I was right. I see in the news Litzman has released a statement calling him anti-haredi. I dont know if others have yet said anything, but Litzman already did.
ReplyDeleteAnd the Rafi who would respond to you in that conversation would say the same thing. Which is why in my post I said some will call it anti-haredi because large families benefit from it the most, and lets call a spade a spade, the haredim (and Arabs) have on average the large families. That does not mean secular cant have lots of kids and collect more money as well. If the budget was limited to haredim only, it would be a haredi benefit. But because it is for anyone with kids, the more kids the more money, it is for anyone to collect on. Cancelling it though, even if not anti-haredi, will truthfully harm the haredim more.
Fair enough.
ReplyDeleteBut just to continue your logic, while the program is not anti-secular, keeping the program as is will continue to be supportive of charediim at the secular community's expense.
I say get rid of kitzbat yeladim and replace it with an Earned Income Tax Credit, like in the US. Wait, that would require some earned income...
ReplyDeleteCommenter Abbi raises the point of Earned Income Tax Credit. But there's a greater problem here, and that is that as a male I have no income tax credits at all for my children. That's what I heard that the child allowance is supposed to replace. But it goes to the mother, actually, and it doesn't depend on income. Why can't they allow income tax credits for fathers as they do for mothers? Especially in the case of our family where I work and my wife does not.
ReplyDeleteI think the assumption in the tax authority is that men are going to work, while women need to be encouraged and incentivized to work. Men dont need the tax credits, because they will work anyway. Giving them the credits is giving away free money. Women might prefer to stay home, so to encourage them to join the workforce, tax credits are given.
ReplyDeleteAnd that further encourages the Charedi system of women working and men not working.
DeleteI think the kitzvat yeladim (and all other credits) should be eliminated and tax rates reduced to the point that the same total amount of tax revenue is coming in.