Israel's Neoliberal Hammer Strikes
by Stephen Lendman
In America and across Europe, austerity is official policy. It's also true in Israel.
Among developed countries, America, Britain, and Israel are the most socially unjust. Street protests rail against public policy. Favored corporations and rich elites alone benefit. Most Jews suffer, Israeli Arabs most of all.
Worse ahead is planned. Growing needs and public anger are ignored. On July 30, Israel's cabinet approved sweeping budget cuts and tax hikes on top of earlier ones imposed. More are planned next year. Ordinary Israelis feel it most. Neoliberal policies demand it.
Surprisingly, Israel's defense budget wasn't spared. Defense spending will be NIS (New Israeli Shekel) 100 million less (about four shekels = one dollar).
Israel budgets NIS 60 billion for defense. It's nearly 17% of total spending. Combined with intelligence and other security priorities, it's much more. Israel spends far more per capita than European countries.
Like America, it's a modern-day Sparta. Defense, homeland security, settlement construction, and corporate favoritism are prioritized of over social needs. Occupation related spending exceeds healthcare and education budgets combined.
NIS 100 million hardly matters. Nonetheless, an uproar followed announced cuts. IDF officials called them "childish and ridiculous." They want more, not less. They'll get plenty because it's planned. Washington supplies billions more annually.
Nonetheless, national security is compromised, they claim. How they didn't explain. Israel maintains the region's strongest military yet has no enemies except ones it creates.
On August 6, Knesset members approved measures Finance Minister Yuval Steinitz proposed. Netanyahu endorsed them. Agreement came after both leaders agreed to modest tax hike easing.
Effective September 1, value added taxes (VAT) rise from 16 - 17%. Israelis will pay more for cigarettes and beer effective immediately.
Earlier tax cuts for the rich cut revenues NIS 40 billion. Ordinary Israelis bear the burden in what they pay. Now it's more. Top tax rates remain unchanged at 48%.
Loopholes let many pay less. It always works that way. Israel replicates the worst of America, Britain and other Western societies. Wealth differentials grow exponentially. Ordinary people face harder times to get by. Repeated budget cuts impose greater harshness. Where it ends, who knows.
Tax increases are expected to raise revenues by NIS 7.5 billion. Income taxes are high. Rich Israelis find ways around them. A last minute agreement was reached. A planned 1% hike won't apply to workers making less than NIS 14,000 a month (around $3,500).
At the same time, the lower limit for fourth bracket payers drops from NIS 21,800 to NIS 20,000 a month. Israelis earning over NIS 20,000 monthly (about $60,000 annually) pay one-third of their income in taxes. Others earning multiples more find clever ways to pay less.
With high food, housing, medical and other expenses, ordinary households struggle to get by. Street protests express rage. Instead of help, policy measures enacted make things harder. Higher taxes alone strain family budgets.
Across-the-board 5% cuts in most ministries are affected. New priorities were claimed. They include halting cross-border migration, combatting tax evasion, upgrading firefighting capability, and improving civil defense preparedness.
Israel calls it the Home Front Command. In America, it's Homeland Security. Others call it the national Gestapo. How it operates explains why. Israel replicates its harshness. Perhaps tougher tactics are planned.
After passage, Netanyahu claimed:
"We have approved steps to prevent us from entering into a huge deficit in an attempt to protect the Israeli economy and the jobs of Israeli citizens."
"These steps are responsible for protecting the Israeli economy from the global economic crisis."
Knesset members were called back from summer recess to address two government-sponsored bills. One involved tax hikes and budget cuts discussed above.
The other gives transnational corporations huge tax breaks. Earlier rules meant keeping profits in Israel. Now they can do what they wish after paying minimal taxes.
Privileged segments of society needing least or no help benefit most. Others bear the burden. It works the same way in America and other Western societies.
Israel's corporate generosity remains effective for one year. Expect renewal on expiration. Benefits include lower tax rates and avoiding them entirely on dividends called "trapped profits."
One final hurdle remains. The measure first goes to Knesset Finance Committee members for approval. Second and third full body readings follow before becoming law.
Expect little opposition. Nonetheless, Labor Party chairwoman Shelly Yacimovich called corporate tax cuts "unconstitutional and illegal." For sure they're unfair.
"Will the prime minister collect the tens of billions that ought to be collected by law, or will he place another tax on the weak sectors," she asked?
Meretz Party chairwoman Zahava Gal-On also objected. She called the bill "robbery in broad daylight." It changes the rules of the game and "redefines the concept of equality and justice."
Israel began doing it decades ago. Social injustice hits hard. Gal-On added:
"These corporations owe millions to the state, but because they are wealthy enough, and because Netanyahu and Steinitz are standing before an ever-growing debt, which they are responsible for, they are willing to accommodate them."
Steinitz called his package "measured, correct and courageous steps that will protect the Israeli economy and Israeli citizens from the global (financial) crisis. We have economic governance here."
Growing wealth disparity hardly proves his claim. More austerity when greater needs aren't addressed reveals what ordinary Israelis face. Expect worse ahead. In mid-September, cabinet members discuss FY 2013 budget priorities. More social spending cuts are planned.
Money power runs Israel and Western countries. Rich elites get richer. Others pay onerous taxes and struggle to get by.
Thousands protest publicly. Moshe Silman self-immolated and died. Others set themselves ablaze. Doing so symbolizes social injustice harshness.
Netanyahu and other hardliners ignore pleas for help. Militarism, settlement construction, corporate favoritism, elitism, and neoliberal harshness remain prioritized. Public needs be damned.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"
Visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.