Israeli Parties' Tax Cut Promises Face Expert Scrutiny
Translated & summarized from N12 by baba
Israeli political parties are proposing various tax relief measures ahead of elections, including adjusting tax brackets and expanding grants. Experts from think tanks have analyzed these plans, questioning their feasibility and funding. While some proposals like automatic tax bracket adjustments are seen as progressive, others like broad tax cuts are deemed economically unsubstantiated. Several parties, including Likud and Shas, did not provide detailed responses to expert questionnaires regarding their plans to increase citizens' net income.
The story in 5 lines · by baba
- Israeli parties propose tax cuts and income support, but experts question their feasibility and funding.
- The Democrats suggest adjusting tax brackets and expanding work grants, facing funding questions.
- Yisrael Beiteinu and Religious Zionism's tax cut plans are scrutinized for economic viability.
- Likud and Shas did not provide detailed responses, with past actions analyzed negatively.
- Experts highlight a lack of clear funding and economic basis in many parties' proposals.
Several Israeli political parties have proposed measures aimed at increasing citizens' net income, or "neto," ahead of the upcoming elections. These proposals range from adjusting tax brackets and expanding work grants to reducing income and corporate taxes. However, experts from various think tanks, including the Israel Democracy Institute, Berl Katznelson Foundation, Arlozorov Forum, and Kohelet Forum, have analyzed the feasibility and potential impact of these plans.
The Democrats propose reinstating automatic adjustments to tax brackets to counteract inflation's erosion of income, alongside expanding work grants for low-wage earners and gradually increasing the minimum wage. Experts acknowledge the progressive nature of adjusting tax brackets but question the funding sources for expanded grants and minimum wage hikes, noting potential burdens on employers and the state budget.
Yisrael Beiteinu suggests extending work grants to single individuals over 26 earning up to 8,000 shekels, which experts see as a targeted tool for low-wage workers but not a fundamental reform of the tax system. The Religious Zionism party pledges to cut income and corporate taxes, coupled with efforts against the black market and tax system digitization. Analysts deem these tax cut promises economically unsubstantiated, likely to hinder budget targets and disproportionately benefit higher earners and corporations.
Other parties like Yachad focus on reducing the cost of living to increase purchasing power, a strategy experts find economically sound but evasive regarding direct tax or wage changes. The Likud and Shas parties did not respond to the questionnaire; their past actions, such as raising VAT and freezing tax brackets, are analyzed by experts as having increased the burden on those least able to bear it. The Joint List advocates for a wealth redistribution, which experts argue is factually inaccurate and could exacerbate brain drain.
Experts noted several common shortcomings in the parties' responses, including a lack of clear funding mechanisms for proposed measures, reliance on unproven growth assumptions, and a failure to connect tax policies to the expansion of civil services. While some parties engaged with the questionnaire, Likud, Shas, and Otzma Yehudit declined to provide detailed responses.
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