Economist Warns of Tax Hikes After Elections

Economist Yaron Zelikha warns that after the elections, the Finance Ministry may raise taxes instead of implementing reforms. He criticizes the long-standing practice of increasing the tax burden during budget crises, noting it will hurt the population and businesses. As an alternative, he proposes tax cuts, improved government spending efficiency, and fostering competition.

Economist Yaron Zelikha warns that after the elections, the Ministry of Finance may again resort to raising taxes as the primary tool for solving budget problems. According to him, over the past 15 years, the Ministry has repeatedly chosen this path, regardless of the cause of the crisis—war, market crisis, or election campaign. Zelikha notes that this policy has been observed for about 50 years, except for periods following the 1985 stabilization program and the 2003 crisis. He criticizes the prevailing mindset where almost any budget problem is solved by raising taxes, while often granting exemptions to large corporations. As an alternative, Zelikha proposes tax cuts, improved government spending efficiency, fostering competition, and reducing the role of the state. He cites the example of former Finance Minister Moshe Kahlon, who, on his advice, reduced VAT instead of raising it. Currently, according to media reports, the Ministry is preparing a plan to raise VAT and corporate tax, which will hurt small and medium businesses, as well as reduce the car purchase tax. Zelikha emphasizes that the Israeli economy suffers from a high cost of living, expensive housing, and excessive regulation, and raising taxes is the easiest but often worst solution.

Economist Warns of Tax Hikes After Elections