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Israeli GDP rises, but Israel’s tax burden one of worst among developed countries

Posted on August 31, 2007 • By Miriam Schwab
Category: Business |

It was the best of times, it was the worst of times.

So often, life in Israel seems to simultaneously embody two different ends of a spectrum: we experience joy and pain, success and failure, love and hate - all together. It is no different in Israel’s business sector. Israelis were greeted last week with both happy and upsetting news about Israel’s economy. The International Monetary Fund raised Israel’s per capita gross domestic product to 18th in the world, up from the 21st spot. And yet, Tax Freedom Day only came for Israelis this year on August 2, making Israel one of the countries with the worst tax burdens in the developed world.

Tax Freedom Day is the day in the year when citizens have finished paying their tax dues, and every penny (or agura) from that point on is theirs to keep. So, according to the IMF, Israel’s GDP is similar to that of France ($31,872), Germany ($32,178), and the OECD average of $32,098. And at the same time, Israelis work more and more every year for the government than they do for themselves. And there is no light at the end of the tunnel; according to the Jerusalem Post, Israel’s 2008 state budget draft that just passed by the cabinet is the largest in Israel’s history. Yikes.

So, being of small economic mind, I have a few questions about these figures:

• What happened to all of Binyamin Netanyahu’s talk of privatization and shrinking the public sector? Bibi “shrank” the public sector by firing civil servants and pushing privatization. But it seems that instead of moving away from a “fat” public sector, the only thing that has happened is that we’re all becoming unofficial government workers, who work to fund our government’s growing expense accounts.
• How can we simultaneously be competitive with France and Germany in GDP terms, but be one of the worst countries when it comes to tax burdens? Does that mean that we Israelis are all working harder and harder, and making more money, but we never see most of that money since it goes straight to the government’s coffers?

Well, gotta get back to work now before I have to start paying taxes again…

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