Self-declared champion of the Israeli middle class Finance Minister Yair Lapid announced a turnabout this week, coming out for corporate tax breaks as the key to economic salvation, The Jerusalem Post reported on Thursday.
“We have another tool, called ‘tax benefits,’ and all the populist shouting in the world won’t make any difference. We are going to use it,” Lapid declared.
The statement, made during an economic conference at the Israel Democracy Institute, represents a reversal of his populist position against corporate tax breaks in May.
At that time, a Finance Ministry report found that the four biggest companies — Teva, Intel Israel, Israel Chemicals and Check Point Software Technologies — received 70 percent of all corporate tax benefits in 2010. The NIS 4 billion in breaks, provided by the Law for the Encouragement of Capital Investment, effectively brought their tax rates down to about 3 percent.
The revelation unleashed a public outcry. Lapid confronted then-Teva CEO Jeremy Levin on the issue, telling him, “It is time to change the rules of the game on non-taxable income of international companies and on tax benefits.”
When asked to explain his sudden turnabout, a Lapid spokeswoman denied it, saying he had never been against tax breaks and only wanted to ensure they did not exist for their own sake, but contributed to job creation.
“We need to oversee the tax benefits for large companies. We need to create better mechanisms for checking them and increasing efficiency, but we must continue to use tax benefits to bring Intel and Cisco and Siemens and Google to Israel, because that’s also what makes us innovative — our relationship with the leading technology companies in the world,” he said.
Lapid went on to tout innovation as the key to a higher standard of living for Israelis.
Opposition leader Shelly Yacimovich was not won over. In a speech to the Manufacturers’ Association of Israel, she called him a failure.
“This is the finance minister’s plan? Is there no limit to his empty words and bad-spiritedness? Is repeating a song so we remember it a replacement for an economic plan?” Yacimovich asked.
Yacimovich said Lapid is “simply mocking” the people. “In the last budget, taxes were only on the working people and on small and medium businesses,” she added.