Israeli Economy Continues on Right Track
Written by: Aaron Katsman | October 11, 2007
By Aaron Katsman
IsraelNewsletter.com
A report issued by the Israeli Ministry of Finance yesterday went without much fanfare but confirms the health of the Israeli economy, and that the economic reforms put in place by former PM Bibi Netanyahu are working. The report stated that for the month of September, there was a budget surplus of 500 million NIS (about $125million). Most of this surplus came from increased tax receipts. Keep in mind that Netanyahu’s reform centered on cutting taxes, cutting government spending, privatization and increasing economic growth in the private sector — supply-side economics in a nutshell. While all the naysayers continue to reject the evidence that the way to true economic growth is through this formula, the proof is in the pudding.
Once again we see that the government increased revenues while lowering taxes, through increased growth, and as a result more taxes actually being paid.
To the credit of current PM Ehud Olmert, he has left things alone, not screwing anything up (economically that is); no easy feat for a politician. He has even encouraged the continued privatization of government and quasi-government monopolies. Take for example Aliya (immigration to Israel). A recent government decision empowers private organizations like Nefesh B’Nefesh to take the lead in offering services to North Americans looking to move to Israel. This private organization has been more successful in the last 5 years than the quasi-governmental agency has been in the last 25. This is but a small example of how the private sector can get things done in a better and more efficient matter.
The next question is what should be done with the budget surplus? That’s for another post but in short…….. CUT TAXES!!!!!!!!!
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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