Bibi’s Taxes–Value Subtracted

Haim Watzman

Gershom and I had an argument back in 1996, when Binyamin Netanyahu was elected to his first term as prime minister. Gershom claimed that Bibi was, at core, a radical right-wing ideologue, whereas I argued that he was an opportunistic hack.

In that term, Bibi went on to prove himself a devout Republican-style capitalist on the economic front and a territorial maximalist on the diplomatic front. But, in the wake of the government’s approval of the national budget yesterday, I think I might win the argument this time around. Over the past week, Bibi has swayed, bent, and ended up breaking most of his principles. The result is a budget that is a mishmash. It’s not the tax-cutting, small-government budget he promised, nor is it an Obama-style Keynesian economic recovery budget. It’s the worst of both.

One of its weirdest provisions is the hike of one percent in the value added tax, to 16.5 percent, and the decision to levy the tax, for the first time ever, on fresh produce. No one likes tax hikes, nor do people like filing their tax returns for the year. Luckily, software exists to help people do this and you may even find TurboTax deals online too. If you are running a business, you may want to try professional tax services similar to those from somewhere like Dave Burton, that may be able to provide you with a tax accountant nyc who might be able to help manage or sort the taxes for your business.

With Israel, like the rest of the world, facing recession, national economic policy needs to encourage consumption. Raising this consumption tax does the opposite. Goods and services will cost more, and people will buy less. Economic activity will slow, jobs will be lost, and people will buy even less.

Furthermore, the VAT is a regressive tax. It’s paid by all Israelis, and since the poor and middle class (this includes the authors of the South Jerusalem blog) spend nearly all their income and have little to save, they pay a higher proportion of their income in VAT than do rich people. Imposing it on basic goods like produce makes it even more regressive.

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The Cream of the Drop: Shamenet as an Economic Indicator

Haim Watzman

Shamenet 055Forget economic indicators, price indexes, and production figures. Here’s the most salient sign that Israel’s economy is plunging from exuberance into recession: today’s issue of Shamenet (in English the name would be Cream), Ha’aretz’s monthly supplement for conspicuous consumers, runs only 66 pages rather than the usual 80-100. But don’t be depressed—an economy where Shamenet is reduced to skim milk is just what Israel needs.

Once a month I pick up my copy of Ha’aretz from my doorstep and this heavy, glossy magazine falls out. There’s never anything in it for a guy with my limited line of credit, but I leaf through it as an anthropological exercise. What can I discern about the lives of Israel’s top socioeconomic decile from the ads for imported organic Provencal deodorants, diamond-inlaid watches, and high art auction houses? Here I can discover what the simple folk of the garden suburbs north of Tel Aviv do. What they do, it seems, is agonize over what brandy to display in the glass-fronted liquor cabinets in living rooms into which my entire apartment could comfortably fit.

It’s clear this month that times are tough. The article about choosing the right brandy focuses, gasp, on domestic brands. “Herod’s Palace Will Always Be In Fashion,” proclaims the headline over an interview with one of the owners of the swankiest hotel in Eilat. The article reassures us that we need not be embarrassed to show our face there; after all, even Bernie Madoff won’t be making it to San Remo this season.

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