The noisy public debate between Amir Peretz, flamboyant head
of Israel's central labor organization, and Finance Minister
Shochat over the proposed financial reforms continued as
Peretz threatened to call a general strike for next Monday
after Shavuos so as not to interfere with the holiday. This
Histadrut is calling it the largest strike in the history of
the State, hoping that 1.5 million workers will participate
and leave the country in a state "similar to Yom Kippur."
Publicly, at least, the Histadrut says that the strike is not
inevitable, and that it is still open to discussions.
The reason for the strike is labor's dissatisfaction with the
package of tax and financial reforms proposed by the Ben
Bassat commission of the Finance Ministry. The major points
are said to be the proposals to tax various savings funds for
workers, particularly the education funds (keren
hishtalmut), and to reduce tax breaks for married women.
The government has responded mainly by asserting that the
take-home pay of many workers will increase as a result of
the reform, so that the strike is not justified. The
government argues that the overall effect of the reform is to
take taxes from capital and to give it to wage earners.
However, the entire plan is very complex and there are many
individual components that have consequences that are
unrelated to the overall goals.
Degel HaTorah set up a professional committee to examine the
consequences of the reform for the chareidi community that
met in Bnei Brak last week. The meeting was attended by MK
Rabbi Avrohom Ravitz; MK Rabbi Moshe Gafni; Attorney Yonah
Moshkowitz; legal advisor Rabbi Yaakov Virzhbinski; tax
advisor Menachem Weinberg; accountant and economic advisor,
Yehuda Eliraz; general director of the Bar-Kol marketing
chain, Rabbi Menachem Carmel; Rabbi Yaakov Gutterman and
Rabbi Shlomo Goldenthal, coordinator of committee activities.
The meeting was opened by Rabbi Gafni, who noted, "The Ben
Bassat plan lowers the tax on wages, but calls for a
concomitant involvement of tax authorities [in areas which
they had hitherto left alone such as] estates, education
funds, and savings. The chareidi sector strongly opposes
inheritance and gift taxes. We, as representatives of the
chareidi sector, are obligated to work for cancellation of
the plan."
The gift tax would place an intolerable burden on the
chareidi sector (and many other sectors) since it makes the
support that parents provide for their children at the time
of marriage, which is legally a gift of many thousands of
shekels, a major tax event.
Rabbi Carmel noted that there are many opponents of the plan
and there are complete sections of the report which are
unacceptable even to the Accountants' Association. "It is
impossible to acquiesce to a situation wherein the children
of people who have worked and paid taxes during their entire
lives will now be required to pay inheritance tax. How is it
reasonable that a man who has saved every penny in order to
marry off his children will have to pay an additional tax on
gifts to his sons when they marry?"
Both gift taxes and inheritance taxes are often said to be a
form of double taxation since the taxpayer has to pay taxes
on his original income and can only save what he has left
after taxes, and then must pay tax again when he gives the
gift or passes it on in his estate.
Accountant Menachem Weinberg noted that whoever buys an
apartment for his children will have to declare the source of
the funds, and thus be drawn into the tax cycle. This could
be a severe burden even for the vast majority who acquired
their funds legally since they can be required to provide a
complete accounting to the satisfaction of the tax
authorities of all the money they have. Few people are so
well-organized that they can account for all their resources.
In addition, anyone buying or selling a home will be required
to pay additional property improvement tax.
Rabbi Weinberg commented that one of the reasons for
widespread attacks against the large families of the chareidi
sector in recent months in the press and the Knesset, is to
eventually push for granting tax points to males. Under the
current system, all tax points for children are credited to
the mother.
Rabbi Yaakov Virzhbinski said that the Finance Ministry wants
everyone to file a personal tax return. Every yeshiva student
will also have to file a statement of income. Under the
current system, wage earners generally do not have to file a
tax report of any kind. Their taxes are deducted by the
employer who reports this to the government. This is one area
in which the bureaucracy in Israel is much lower than in many
other modern countries where most citizens have to file
yearly tax reports.
Those interested in making suggestions on the issue of the
Ben Bassat report should contact committee coordinator, Rabbi
Shlomo Goldenthal, at Degel HaTorah headquarters, fax number
03-6762623.
