National Labor Union Chair Opposes Finance Ministry's Capital Market Reform Citing Harm to Middle Class
The Israeli Finance Ministry is advancing a comprehensive reform of the capital market savings system, known as the "Unified Investment Account," aimed at streamlining tax conditions across various savings instruments such as provident funds, savings policies, and mutual funds. The reform intends to allow savers to switch freely between investment products without triggering capital gains tax at the time of transfer. The ministry expects this change to increase competition, lower management fees, and benefit most savers with relatively low balances.
However, the National Labor Union, led by Yoav Simhi, strongly opposes the reform. Simhi warns that the reform's imposition of a cumulative deposit cap of 200,000 shekels for receiving new tax benefits will create a tax barrier for savers aiming to accumulate larger sums. Beyond this threshold, savers would lose tax advantages and face full taxation, which critics argue will harm middle-class families striving for financial security.
The Finance Ministry counters that most existing provident funds hold balances below the 200,000-shekel cap, suggesting limited impact. Yet, the National Labor Union and other critics describe the cap as a trap that restricts middle-class savers from building meaningful savings. They argue that the promised tax benefits for some will be offset by increased taxes on those exceeding the cap, effectively shifting the tax burden onto diligent savers.
Simhi emphasized that at a time when Israeli families struggle with high living costs, mortgages, and expenses, the Finance Ministry is "once again reaching into the middle class's pockets." He criticized the reform for reducing tax benefits for hardworking families who pay taxes and try to secure their children's future, calling it a direct blow to their ability to accumulate wealth and prepare for retirement. Simhi concluded that a healthy economy requires strengthening savers, not penalizing them.
