The one percent rise in corporate tax rate planned by the Ministry of Finance will hamper economic growth more than cuts in the government's budget or a rise in other taxes. An increase in the corporate tax rate may create a significant gap in corporate tax rates between Israel and countries with similar characteristics.
The paper discusses how members of the Trachtenberg Committee identified the reasons the average Israeli finds himself in debt and pays too much of his wages to the government. The government is managing a centralized ,cartelistic economy, but the committee then devoted most to their report to planning an even more centralized economy with an even heavier tax burden.
The chief scientist program is designed to support Israeli technological projects. The level of subsidization, as revealed in JIMS' position paper, is much higher than the level used by OECD members. In fact, the Chief Scientist office distributes freely taxpayers' money without filtering and sorting the best projects. Usually, the bulk of the budget is given to large companies with extended public relations budgets.
The Ministry of Finance is thinking of raising the VAT on all other products from 16.5% to 17.5%, or increasing income taxes to cover their "overdraft." JIMS' research paper explains why such proposals are bad for Israel's economy and for the ministry of finance. The other proposal of increasing income tax on salaries and business income seems to be an even worse idea. As outlined in our paper, when in 2002, the social contributions paid by employers and employees were increased, 30,000 businesses filed for bankruptcy.
The Israeli government intends to raise 200 billion NIS this year and in 2010 (100 billion each year) by issuing government bonds. From this, 140 billion shekels would be raise on the domestic market and 60 billion on the international market. Some of these funds will be used to re-finance the debt taken in 2002 -2003, but 80 billion are new debt.
As early as 1990 an attempt was made to cancel the 0% VAT rate on fruits and vegetables. As a result of fierce opposition and problems that were raised at the time concerning implementation, it was ultimately decided to leave the situation as it was. Today, after almost 20 years, the Finance Ministry is once again attempting to revoke the VAT exemption on fruits and vegetables.
Misdirected economic policies exacerbated the economic woes in Egypt and became one of the reasons hundreds of thousands of poor people took to the streets. In 2007, European Union energy ministers adopted an ambitious plan to ensure that by 2020, 10% of transportation fuel would be biofuels. This goal was reaffirmed in 2009. Artificially encouraging a reliance on biofuels has caused and will cause food prices to rise, adversely affecting mainly the world’s poor.