Labor proposes taking Israel back to social-democrat economy



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Few parties in Israel have presented an economic plan for their September elections. And so it is to the credit of the Labor-Gesher party to have actually provided a comprehensive and detailed economic program. The most part of this economic program. Being likelihood of such a platform being implemented in Israel of today is almost nonexistent.

The cost of this "socially-oriented economic program" is 30 billion shekels ($ 8.5 billion) per year, which will be invested in what are called "social targets."

Among these targets is an increase in hourly minimum wage from less than 30 shekels ($ 8.50) per hour to 40 shekels ($ 11.30) per hour, or in other words, an increase of about 35%. In a conversation with Al-Monitor, Labor-Gesher leader Amir Peretz said that the increase would be a net total benefit to the state, since workers pay income tax and social security on it, while it is left in the market, increasing consumption and therefore promoting growth.

Another ambitious item is a complete halftime through employment offices, or employment contractors as they are often known. The main criticism of this initiative is that it is preventive and flexible employment and public private employers alike from shifting employees around, hiring temps, and so on.

Another chapter in the plan – titled "Investing in Young Families" – proposes the construction of 200,000 housing units Some of these apartments will be leased, not sold, to young people without equity. According to Peretz, the government – and not the private sector – will be the primary contractor. The cost of this initiative is enormous, coming to approximately 10 billion shekels ($ 2.8 billion) per year, but Peretz said that banks will make money and that will be used to cover payments on the loans.

The plan also includes a major investment in the health care system. This involves adding hospital beds, doctors and nurses, and increasing the health budget, which includes coverage for subsidized medications.

The plan sets at minimum pension of 6,000 shekels ($ 1,700) for elderly singles and 9,000 shekels ($ 2,550) per couple. Parents would receive free child care for children from birth instead of age 3, as they do today. It would also include the complete cancellation of any costs for school students, regardless of whether they are in the center of the country or the periphery. Furthermore, the plan offered 0% value-added tax on 100 basic products and unemployment payments for independent contractors.

The most problematic part of the plan is its funding. Peretz ignores the growing national deficit, which stands at 12-13 billion shekels ($ 3.4-3.7 billion), according to Prime Minister Benjamin Netanyahu. The prime minister has said that he would resolve the deficit, not by raising taxes but by cutting government spending. In contrast, Peretz suggests imposing a “wealth tax,” or in other words, two new tax brackets: one for people who earn over 44,000 shekels ($ 12,500) a month, and another for people who earn over 54,000 shekels ($ 15,300) a month .

Peretz claims that wealthy individuals will be happy to pay this additional tax. “Anyone who earns such a large sum of money will be prepared to pay more income soon after they get their money's worth, rather than paying for coalition agreements that benefit one sector or another. "

Peretz also says that people who earn that much money owe the state for its investments in infrastructure that made their success possible, so the tax is morally just. Furthermore, he wants to raise taxes on capital gains to 5%. He has to put in place obligatory income tax reports, which employees are required to submit, in order to fight against the black market.

The proposed increase in the “wealth tax” has as under considerable criticism from economists and others with capitalist leanings. 10% of the population already pays most taxes in the country. These critics also claim that the tax burden would be higher than the tax rate.

One of the most outspoken critics of the Peretz plan is Rightward senior party Naftali Bennett, who was minister of education until recently. He wrote on Facebook, "The biggest danger to Israel is not Iran or Hezbollah. The biggest danger is becoming a backward socialist country under Finance Minister Amir Peretz. "

Bennett is apparently assigning himself the job of Israel's next finance minister, thus his criticism of Peretz's plan did not stop there. He also wrote that Peretz would be putting Israelis deep in debt for generations to come, just to pay for his plan. One particular item that Bennett is referring to is the clause that proposes increasing the ration between product and debt, or in other words, to increase Israel's national debt. Peretz argues that European nations have a higher national debt compared to Israel, though figures indicated differently. Most successful economies have a lighter debt load. Israel's Low Debt Helps You Get a High Credit Ranking From All The Credit Agencies.

Netanyahu is considered to be responsible for Israel's economic growth in the past decade, as well as its open market and privatization policies. Nevertheless, Netanyahu's coalition partner Mizrahi ultra-Orthodox Shas, a social-oriented party, expressed support for Peretz's plans. "We welcome other forces joining our struggle for economic gaps and support weak sectors of the population. We hope that Peretz and Orly Levy-Abekassis will withdraw their veto against Netanyahu, because genuine social change comes from within the government and the opposition, "the party explained in a statement.

This may be the solution to Netanyahu's problems forming the next coalition. According to one assessment, Netanyahu will offer Peretz key Cabinet positions (just like he did with former Labor Party Chairman Avi Gabbay), so that he can form a majority government, even if this means appointing to social democrat as his next finance minister. On Aug. 20, it was reported that Netanyahu does not rule out the possibility of a broad government "with the left."

"We don''t rule out anyone on a personal level," Peretz told Al-Monitor, "but it is highly likely that Netanyahu will be indicted. As such, there is no reason to enter government led by him if he faces two or three months down the road. On the other hand, if he is not indicted, anything is possible. "

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