Tax breaks to stay for big companies, Lapid says

The finance minister laid out his ideas for how to improve Israel’s economy and made it clear that he intends to continue the policy of offering tax breaks to large companies that set up shop in the country.

Yair Lapid lambasted those who “rant” against the tax incentives and argued that it is more important to generate jobs by bringing ventures to Israel.

“Whether the populists and the ranters like it or not, the tax benefits will continue,” he said during a speech given at the conference on the economy and society that was organized by the Israel Democracy Institute on Thursday.

The issue hit the headlines last month when Israel’s largest company, pharmaceutical giant Teva, announced plans for major layoffs; Teva is a major recipient of tax breaks.

Lapid gave as an example the case of electronics giant Intel, that chose to establish a new plant in Ireland rather than in Israel, where it already has several sites, because the Irish offered better tax breaks.

“The ranters were happy, but we lost out on places of work,” he said.

Lapid said he has spent the months since taking up his position earlier this year studying the economic strategy of the finance ministry and that it can all be boiled down to just two things:

“What do we want? That Israelis earn more and that their quality of life improves. How do we get there? We will make an economy founded on innovation.”

Innovation is a strong selling point for Israel, Lapid said and that is where the focus should be.

“The people of the book have become the people of the tablet,” he said.

The finance minister also spoke of improving the status of the middle class, a topic that he placed at the forefront of his Yesh Atid party’s election campaign and that brought strong support among voters.

According to Lapid over the last decade the Israeli economy grew by 26.8% but wages on average only increased by 2.1%.

“In other words the people who raised the state’s profits by more than 26% gained from it just 2% that went to their pockets,” he said. “They built the Israeli economy, they made it into a success story, they put it at the top of the developed nations — and they didn’t get anything out of it.”

Lapid urged investing in issues that are close to the heart for the middle class — education, society, housing, and quality of life.