Israeli Parties Promise Higher Net Pay; Experts Question Feasibility

Several Israeli political parties have presented proposals aimed at increasing the net income of salaried workers, but experts are questioning the practicality and potential impact of these plans. The proposals, detailed in a survey by N12 in collaboration with various think tanks, range from adjusting tax brackets to expanding work grants and reducing income and corporate taxes.

The "Democrats" party proposes reinstating automatic adjustments to tax brackets to account for inflation, which they argue has been eroding net salaries. They also suggest expanding work grants for low-wage earners and gradually increasing the minimum wage. Experts from the Israel Democracy Institute (IDI) noted that while indexing tax brackets to inflation could benefit lower and middle-income earners, it might reduce overall income tax revenue, raising questions about budget shortfalls.

Yisrael Beiteinu proposes extending work grants to single individuals over 26 earning up to 8,000 shekels per month, aiming for a direct increase in disposable income. The Religious Zionism party pledges to reduce income and corporate taxes, coupled with efforts to combat the black market and digitize the tax system. Experts, however, described the tax reduction promises as "economically baseless," potentially hindering budget deficit targets and benefiting higher income brackets and corporations.

The Likud and Shas parties did not respond to the survey. An analysis of the Likud's past actions, based on data from the Berl Katznelson Foundation, indicated an increase in indirect taxes like VAT and a freeze on tax brackets and credits, which negatively impacted average earners. Shas was also part of a government that raised VAT and national insurance fees. Experts noted that the Likud's approach lacked consistent policy, and Shas's record did not demonstrate a comprehensive strategy for increasing net salaries.

Other parties like "Yachad" focused on reducing the cost of living as a means to increase purchasing power, rather than direct tax changes. The Joint List advocated for a redistribution of income, arguing that the current system enriches the wealthy at the expense of workers. However, the IDI countered that this claim distorts reality, as the top income brackets already contribute the vast majority of direct taxes, and such policies could exacerbate inequality and lead to a brain drain.

Experts from the IDI, the Berl Katznelson Foundation, the Arlozorov Forum, and the Van Leer Jerusalem Institute analyzed the parties' responses. A common concern raised by experts across multiple proposals was the lack of clear funding sources and the reliance on uncertain economic growth to offset proposed tax cuts or benefit expansions. The survey highlighted that while parties offer promises, the feasibility and actual impact on the average Israeli's paycheck remain subjects of debate.