Business owners provide the essential goods, services and jobs we all need and want, yet the Israeli government treats them as a tax cash cow to be exploited and abused.
Enough is enough: hundreds of business owners convened in Beer Sheva to protest the government’s heavy burden of taxes and regulations · Business owners, the backbone of the economy and values of any free society, feel under attack · A hostile media, heavy regulation and suffocating taxes create a mood of despair and suppress entrepreneurship and growth · A wake up call for the liberal right and all lovers of freedom
Hundreds of business owners and leaders convened in Beer Sheva to protest the government’s excessive involvement in the market, which is fatally harming the most productive sector in the country. The atmosphere at the conference was full of worry. “In Israel a business owner is like a prostitute”, explained Erez Komitz, owner of a computer company called Giganet, “everyone tries to screw it any way they can: through income tax, property tax, VAT. Everyone sticks their hand in your pocket trying to get at the money. But the only one left alone with the responsibility is me.” Uri Vitkin of Lin Computers also feels that the system harms businesses: “the difficult situation doesn’t allow me to develop my business how I’d like, to employ workers and grow. The feeling is that we’re effectively wage-earners. You invest everything in the business, and in the end half of it goes to the state.”
Eti Malka, tax advisor and owner of ‘Noam Accountancy and Taxes’, provides a slightly broader perspective: “Lately I’ve been aware of many, many businesses that open and close – sometimes within a year. The tax burden just doesn’t allow them to develop and stay in business. I run into this at work every day.” According to her, the taxation and regulatory system creates an anti-entrepreneurial atmosphere. “People are afraid to open a business. People with potential, IDF retirees, come and are afraid of the authorities and taxes that will hit them – and every day it’s something new.”
Thus, under the banner of “Enough with the Business Tax Burden”, hundreds of businessmen from the entire country gathered in Beer Sheva and tried to raise public awareness of the troubles faced by “business owners large and small who are harmed by government policy which send a long arm into our pockets, increases the tax burden on us and leaves us bleeding in the field.”
The State Against Businesses
Saul Sakal, one of the owners of Duty-Free and other businesses, gave the bluntest description of the feelings among business owners: “If I could take all my businesses out of the country in one day, I would do it”, Sakal declared on the conference podium. “It’s impossible to do business when the state conducts itself in a way that harms them.”
According to Sakal, there is a public atmosphere in Israel against business owners: “There is not a day when articles aren’t published on how much people make. But we’re not criminals and not thieves. And when we don’t respond when we’re being robbed and attacked in the media, we’re portrayed as people who exploit the country and then anything can be thrown at us.” He also adds that because of the governmental burden, the economy is shrinking. Retail sales are in constant decline, 500 stores are closed monthly, and the credit that banks can provide businesses is also contracting.
“We are on the wrong track. Instead of making it easier for the business sector to grow, employ more people and pay more salaries, they impose more taxes and think they’ll solve the problem that way,” says Sakal. “Those out in the field feel it themselves and know the truth: from all the blows we are dealt we no longer know what to talk about. We’re simply in a situation where every clerk and every minister does whatever he wants in terms of regulations and rules. You haven’t finished studying what they did today and already there are five new regulations on the way.” According to him, the motivation for entrepreneurship is badly harmed. “We don’t feel like doing more business. We’re unable to continue and develop the business we have. Everyone prefers to sit on the fence, retrench and save.”
“There are people among us with vision, with passion and dreams to improve the environment and city in which they live,” said Avraham Maimon, Acting President of the Chamber of Commerce and Industry in Beer Sheva, “they work from dawn until dusk to fulfill their vision. They are the ones who drive and benefit the economy, they’re the ones who take the risk and who know that if they make a mistake, they will be the ones to fall and pay the price.” According to him, the fact that the tax burden is being increased now, when people are already struggling, is absurd and must be protested: “the burden prevents growth, encourages emigration and leads to the development of a black market.”
Where is ‘neo-liberal’ Netanyahu?
According to Uriel Lin, a former MK and President of the Chamber of Commerce, the root of the problem is the bureaucracy, which doesn’t understand that the economy is based primarily on the entrepreneurial and business sector. “You have young clerks who know nothing about economics, never opened a business, never invested their savings or faced the resultant risks. All they know comes from studies and papers they read, and as a result they adopt an entirely mistaken policy.”
According to him, “There are many restrictions placed on businesses in terms of legislation, rules and regulations. Everyone thinks that they can continue to add more and more restrictions on the business sector and that its capacity to absorb these is unlimited.” But, Lin explains, this is a mistaken assumption. “The business sector can’t take up any more of the burden. The level of taxation of Israel is insane and will seriously harm its economy because by weakening the desire of businessmen to build and develop businesses you seriously harm Israel’s future economic development.”
In contrast, Lin shows how reducing the tax burden has proven itself. “In the previous decade, the Israeli economy grew because there was a reasonable and convenient tax policy. But this changed as soon as the Prime Minister lost direction. For some reason he abandoned his principles. He talks about the need to reduce the burden but he allows the Treasury Ministry to raise it.”
Lin does not spare Netanyahu his criticism. “The Prime Minister explained a short while ago that regulation is a difficult problem and that there is a ‘cartel of regulation’ which is the real enemy. But we don’t expect the Prime Minister just to tell us what the problems are – we expect him to fix them,” says, Lin, who calls on Netanyahu: “Take command!…Tell all regulators that there’s a moratorium on any new regulation this year. Every clerk should work on cleaning house and eliminate harmful and unnecessary regulation…We want a government that fights and doesn’t just report problems.”
Their problem is our problem
The business sector is waking up, and it’s time we pay attention. This sector, which isn’t really a sector, suffers from a structural political inferiority: while unions and the public sector have time to spare to develop and flex their media and political muscles, businessmen invest their effort in running and developing their businesses.
The real heroes of the Israeli economy, those who bear the burden of creating productive jobs, risk their money and resources daily, are more responsible than any for the country’s tax revenue, are incessantly attacked by a seemingly invincible coalition of populists who harm free enterprise. If the political right doesn’t protect business owners, no-one will.
What seems to politicians to be a cow which has unlimited milk to give is actually on the brink of collapsing under the burden of the statist government presently in power, headed by a Prime Minister and Treasury Minister who have left them out to dry. We will all pay the price for this – with compound interest.
Contrary to populist propaganda, most business owners are not the stereotypical millionaire riding in limos. They are our neighbors, friends and relatives. They provide us with our food, furniture, and other goods and services. They fix our computers and repair our household appliances. It’s time we stop treating them like the enemy and realize just how much we need each other.
English translation by Avi Woolf.