The social protests look set to produce results. The Trajtenberg Committee's conclusions, which are expected to receive the approval of Prime Minister Benjamin Netanyahu, were reported last night. The recommendations include a series of far reaching benefits and reforms in a range of fields.
Education
The law mandating free education will be extended to cover three to four year olds in state pre-kindergartens. The process will begin gradually before being introduced throughout the country.
All schools will introduce a long school day - this recommendation will be very expensive and will also be implemented gradually throughout the country.
Supervision of all day care centers (for 0-3 year olds) will be funded by the Day Care Centers Law both publically and privately. The government will also set an upper limit for the amount that day care centers can charge.
Tax points for fathers with small children - there is no final agreement regarding this issue. These benefits are currently enjoyed only by mothers, but if the plan is implemented this will add a significant amount to net salaries.
Taxes
Raising the capital gains tax on the Tel Aviv Stock Exchange to 25%.
Freezing the planned reduction in companies tax, and possibly raising it by 1%.
Freezing income tax reform - this would be a very dramatic measure. The significance would be that the middle class who are due to receive an addition to their net salary in the coming years will not get the extra money. In effect, they will be financing all the previously mentioned benefits.
Raising income tax for high earners - this step is mainly so the government can be seen to be taking action. No final decision has been taken on the issue but it would mainly affect people earning above NIS 80-100,000 per month.
The government will promote controlled rents for families earning less than NIS 15,000 a month by applying incentives or fines to empty apartments or land owned by contractors that is not currently being used.
The money will come from the defense budget
A very substantial part of the budget that will fund these government plans will come from a cut of NIS 1-3 billion in the defense budget.
In addition, there is talk for the first time by the Ministry of Finance about supervision and transparency of the financial conduct of the Ministry of Defense. One suggestion is that Ministry of Finance officials will be directly linked to the defense establishment's systems so that they can control salaries and expenses. The prime minister has yet to decide on this issue, and the defense establishment has expressed enormous resistance to the idea.
Far reaching measures against tycoons
The tycoons who have been targeted by the social protests leaders can expect to be substantially hit in the pocket by government measures.
In part, this will be tied to the government committee on oligopolies, which is proposing recommendations to reduce concentration in the economy. The report contains very dramatic recommendations to break up the pyramid structure of Israel's largest holding companies, while financial and other holdings must be separated. This will require tycoons to sell the banks and insurance companies they own, if they want to hold companies in other sectors.
Published by Globes, Israel business news - www.globes-online.com - on September 15, 2011
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