By Barry Shaw
NETANYA, Israel — In Israel, much of the evening news swirls around the gossip about who will sit with who in a new government coalition after the upcoming election on March 23.
What has been singularly missing from the chatterbox TV news programs has been the vitally important plans of each party over the future of the Israeli economy.
This brief summary will give you an idea of how each party intends to tackle the economy if it should gain power.
This is important as Israel has a deficit estimated to be higher than 40 million shekels according to the Ministry of Finance. It will be the responsibility of a new government, if we get one, to finance this deficit and advance the country.
Assuming that the Likud regains power, the current Finance Minister, Yaakov Katz, has said he has no intention of raising taxes but has refrained from explaining how he intends to lower the deficit.
One of the reasons Israel is holding a March election was because the last coalition could not agree on a budget.
Katz claims that his proposed budget contained provisions that would lead to greater efficiency, investment, and job creation. In the last year, it has been left to innovators and the business community to generate additional income with the signing of joint ventures with the UAE and Bahrain business communities following the Abraham Accords between Israel and moderate Arab states.
Yesh Atid intends to widen the national debt by spending more money in the health system, education, work training for the Arab and the Haredi sectors, and by helping young people who want to set up their own business ventures.
It claims it will cut the costly government ministries to a maximum of eighteen. Most Israelis will think that even eighteen ministries are too many.
Yesh Atid claims it will deal with the deficit by promoting training in trades and technology. They want to raise the number of people employed in innovation from 9% to 15% of the workforce within three years, and then up to 20% within five years.
To help the innovation sector grow, it intends to invest in digital and scientific infrastructure.
Yesh Atid claims it will raise the money to finance this investment by adapting the taxation law to attract hedge funds to bring in the capital that will lead to new jobs.
The Yemina Party, led by Naftali Bennett who made his fortune creating an anti-fraud software company that exited in 2005 with $145 million, intends to apply the Singapore economic strategy of transformation from a production-based economy to an innovation-driven one.
Bennett’s plan calls for a dramatic tax cut for working families and business owners, and by cutting back regulations that are stifling the private sector. He also wants to streamline the public sector by cutting back waste and saving money.
Yemina intends to freeze state budgets for five years, compelling the government to become more efficient. It would also do away with certain ministries including those of water and community development.
Gideon Saar’s New Hope Party intends to pass a budget with major structural reforms. It wants to increase the competitiveness in sectors including banking, insurance, imports, planning and construction. It also want sto reduce bureaucracy in government and national offices.
Yemina also wants to incentivize professional training in high productivity sectors, move to full digitalization in all public services which, it hopes, will lead to a paperless and queue-less country.
The Labor Party budget reflects the far left ideology of its new leader, Meirav Michaeli. It would halt investment in Judea & Samaria “in areas that will not remain under Israeli sovereignty in any future settlement” and abolish what, in its opinion, are unwanted ministries.
It will raise taxes on the private and commercial sectors to provide greater social services to citizens.
Benny Gantz’s Blue & White Party that blamed Netanyahu for not passing the Budget when in power, leading to this election, made a vague statement saying that “the entire Israeli economy will need an injection of encouragement, and time to recover from the damage inflicted on it. We are already acting to prevent spending anarchy that will deepen the fiscal hole, to encourage a return to work and routine, and to create growth engines that will get the economy going through investment in infrastructure and innovation. The deficit will therefore not be the most urgent matter, and Blue & White we will do everything to encourage people to return to work and to encourage investment.”
Meretz plans to raise taxes on the wealthy, the creation of a new “billionaires tax” and also to introduce a progressive inheritance tax at rates of 10-20% on inheritances over five million shekels, not including homes.
The Joint Arab List, like Labor and Meretz, will look to expand the deficit in order to alleviate social distress. It wants to save money by cutting the defense and settlement budgets, and impose higher taxation on capital gains and the wealthy.
On the other hand, the Religious Zionist Party wants to impose a temporary coronavirus tax on high-paid public sector employees. It is also asking for the abolition of what it calls “unnecessary jobs” in the public sector. It also wants to see an across-the-board tax cut making for an easier environment for small businesses.
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Barry Shaw is the International Public Diplomacy Director of the Israel Institute for Strategic Studies. He acknowledges use of information published in Globes, The Marker and The Straits Times.