Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

1 Adar 5762 - February 13, 2002 | Mordecai Plaut, director Published Weekly









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Senior National Insurance Official: "Children's Allowance Recipients Hit Twice"
by G. Lazar

According to a senior official at the National Insurance Institute, sectors that are eligible for children's allowances for large families are hit twice in the new budget: by the 12 percent reduction in children's allowances to be implemented as part of the two percent cutback on government ministries in the 2002 national budget, and even before that by the 50 percent erosion in real terms over the past 25 years because the allowances are not linked to the average nationwide income as are most transfer payments.

The official told a Yated Ne'eman reporter that while all other National Insurance allowance are linked to average income figures, the children's allowance for large families is linked to the price index, a policy that has resulted in a significant erosion since the allowance was first implemented. In the year 2000, for example, when other National Insurance payments were increased by 6.1 percent, the children's allowance rose a mere 1.2 percent. Today children's allowances represent only 2.5 percent of the average household income.

According to figures National Insurance Deputy Director- General L. Achdut presented to the Knesset Finance Committee, the weakest sectors, which include most chareidi families, will be hit the hardest by the reduction in the children's allowance. For many, where the children allowance constitutes a significant portion of their income, the cutback could mean a reduction of up to 4 percent of their monthly household income.

Last week the Finance Committee rejected a proposal by MK Rabbi Moshe Gafni to diminish the cutback to 9 percent instead of 12 percent. Only MKs from United Torah Jewry and Shas supported the proposal. MK Rabbi Shmuel Halpert noted that National Insurance funds are derived from the public and the allowances actually represent a partial return of the monthly payments to National Insurance, not a handout to the public.

Twenty-five years ago the Ben Shachar Reform exchanged the income tax "credit points" system for a social benefit program based on the number of children per household. The 50 percent erosion over the years subverts the reform's goal.

On several occasions the National Insurance Institute has stated that it holds large amounts of unutilized money for children's allowances in reserve funds. As recently as 1999, the Finance Ministry transferred NIS 18 billion ($4 billion) that had been collected in the children's allowance budget to other departments; in 1998 NIS 10 billion in surplus funds were transferred out of the children's allowance budget; in 1997 the figure was NIS 6 billion.

Although it was originally proposed that the cutback be retroactive, in the end it was agreed that it would start from the next payments in March, and would be limited to the year.

An annual publication called Yaldei Yisrael published an annual report that the Council for Children's Welfare presented to the Knesset's Employment and Welfare Committee last month. A close examination of the report shows, based on figures gathered by the Central Bureau for Statistics and the National Insurance Institute, the following alarming facts:

Out of 2.152 million Jewish children (not including East Jerusalem), one-fourth of the total (480,000) live below the poverty line. In the year 2000, 370,000 children (18 percent) are from families that subsisted only on unemployment benefits or guaranteed-income benefits. The number of children whose parents receive guaranteed-income supplements increased by 200 percent over the last decade, while the number of children whose parents receive unemployment benefits rose by 55 percent over the last five years to a total of 120,000 children.

In a conversation held some time ago, then National Insurance Director-General Yochanan Shtessman told a Yated Ne'eman reporter that if the Finance Ministry's initial proposal to completely cancel the new children's allowance law had been accepted, another 50,000 families, including 100,000 children, would have been brought into poverty. National Insurance workers say the 12 percent cutback will bring thousands more children into poverty.

Number of children Previous allowance Cutback New allowance
1 174 21 153
2 348 42 306
3 695 83 612
4 1,398 168 1,230
5 2,266 272 1,994
6 3,134 376 2,758
7 4,002 481 3,521
8 4,870 584 4,286
9 5,738 689 5,049
10 6,606 793 5,813


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