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Sheftel: Trajtenberg Ideas would Harm Us All

The Trajtenberg Committee’s ideas would set back Israel’s economic growth, ultimately harming everyone, Sheftel says.
By Maayana Miskin
First Publish: 9/16/2011, 12:25 PM

Yoram Sheftel
Yoram Sheftel
Flash 90

The Trajtenberg Committee’s recommendations to ease the cost of living for Israeli families would ultimately leave the whole country with less, Attorney Yoram Sheftel said, speaking to Arutz Sheva. Sheftel has asked Finance Minister Yuval Steinitz not to implement the committee’s ideas.

The recommendations include raising taxes to pay for a decrease in daycare costs outside central Israel, and an increase in the negative income tax given to low-earning working mothers.

“These recommendations will slow economic growth in Israel,” Sheftel argued. “Canceling the reduction in direct tax – which today stands at 24% - will hurt growth.”

“When you raise taxes, you end up with less, because people have less motivation to invest… When you lower taxes, companies take more risks, more businesses are established, there are more workplaces, and there’s less tax evasion,” he continued.

Sheftel pointed to Ireland as proof, noting that when Ireland cut taxes from 40% to 10% “its economy flourished.” While Ireland is now experiencing financial woes, that is due to other policies, he said, such as poor management of banks.

Israel itself has experienced positive results after lowering taxes in the past, he added. Lowering taxes for companies led several major international corporations to invest in Israel. For example, he said, Intel chose to build in Israel as taxes went down to 18%, and by doing so, created 3,000 local jobs.

Left-wing protest organizers have also dismissed the committee's recommendations, although for different reasons: they say the recommended steps are not enough. Some organizers had stated in advance of the recommendations that they would be ignoring the committee.