The much anticipated economic plan of the new Netanyahu government was announced today, with tax cuts and privatization taking a leading role. While the plan calls for  promoting jobs and halting unemployment, the cornerstone of the plan is tax policy and structural reform.

Netanyahu laid down the gauntlet by saying that by lowering taxes, Israel will become of of the world’s most attractive investment destinations. As the rest of the world is marching towards socialism, Israel appears to be headed in the other direction, embracing free market principals that have led the world to unseen prosperity over the last 28 years.

According to Globes: “Netanyahu and Steinitz also announced decisions on the structure of tax cuts between 2009 and 2016, which focuses on the middle class. Netanyahu said, “The middle class bears the heaviest burden, and as a complementary measure, we’ll promote the abolishing of exemptions and improve collection. Excellent people are working there, but it’s no secret that the institution has been traumatized.”

Netanyahu’s tax plan calls for reducing the company tax rate to 18% by 2016 and reducing the maximum income tax rate for individuals to 39%.

Netanyahu added, “The individual tax rate will fall in 2010. We must distinguish ourselves from the world, so that everyone sees that we’re the most attractive. We’ll we’ll attract entrepreneurs and capital because the company tax will fall.”

Let’s see if once again Netanyahu’s policies can save the Israeli economy from the abyss, and be seen as a model worldwide, that lower taxes, privatization and individual land ownership are the cornerstones to real economic growth; and not by government printing presses working 24/7. to artificially stimulate the economy while bankrupting future generations.

Share with others:

Could the Obama plan to regulate the VC industry in the US, provide a big boost to the Israeli VC industry? Sure could be the case. With Obama trying to regulate everything that has a smell of money, the VC industry could be in for trouble. That means opportunity for Israel. this means that the new Netanyahu government must cut taxes across the board and especially corporate taxes, that will help spur job growth and entrepreneurism.

Batya Feldman of Globes has an interesting interview with some local VC players. An an interview with Benchmark’s Michael Eisenberg: “Opposition to the rules being drafted is to be found in Israel as well. Michael Eisenberg, partner at VC firm Benchmark Capital, takes issue with the intention to impose the regulations on the world of venture capital.

“Geithner spoke of the need for regulation of anything that could become a substantial threat to the economy,” he says, “and I don’t see how a venture capital fund could represent a threat to the entire financial system. But we can relax. Regulation will apply to venture capital finds that will be put together in the future, so no problems are expected for funds that have already raised capital.”

How far will the new rules affect Israel’s high-tech industry?

“It’s hard to know what the regulation will consist of. If there’s a requirement to report on every investment, that will be impossible. However, for Israel this is in fact a once in a lifetime opportunity, one that could make it a world financial center. If they impose restrictions on the funds in the US, in Israel we should give incentives, loans and insurance that will encourage funds to register in Israel. That way we won’t be the carriage but the locomotive.

We here about the demise of the Israeli VC industry. Maybe Israel can capitalize on Obama’s mistake and not only save the VC industry, but have it both flourish here and attract foreign funds as well.

Share with others:

In an upset that could spawn internal fighting within the United Torah Judaism(UTJ), MK Moshe Gafni scored a win over favorite Yaakov Litzman to head the powerful committee.

According to Globes: “MK Moshe Gafni (United Torah Judaism) will be the next chairman of the Knesset Finance Committee, the party’s five MKs decided today. He beat party chairman and former Finance Committee chairman MK Yakov Litzman for the post. Litzman has been expected to get it back. The upset occurred during the internal party voting, when MK Meir Porush, a member of the Agudat Israel faction of the party, backed Gafni, a member of the Degel Hatorah faction of the party. When the voting was over, Litzman stormed out of the room.”

Once again Porush finds himself in the middle of a political firestorm. His intrusion into the local election in the ultra-orthodox city of  Beitar Illit, irked so many, that he ended up losing in his bind to become mayor of Jerusalem.

Share with others:

With Israeli institutions of higher learning constantly complaining that they need money and on the verge of bankruptcy, a very interesting( and not widely reported) tidbit was published by the State Comptroller Micha Lindenstrauss. He cites gross mismanagement of funds and irresponsible spending as the main culprit. Go figure!

According to Ynet: “The report reveals monetary bonuses outside the accepted standards, stipends for non-faculty professors, business class tickets abroad funded by research budgets, and more. According to the report, the universities’ true economic state of affairs are not represented by the published balance sheets, and they systematically try to avoid any and all form of regulation. For instance, no future commitments for workers’ rights that have accumulated for years have been listed (a notable exception to this is Haifa University).”

I always find it interesting when public institutions have to open up their books. You always find interesting goodies, and it appears that in the case of Israeli universities, the goodies are first-class.

Let’s hope that some accountability is required of these institutions, before they receive more taxpayer money.

Everyone talks about education reform. Reform is usually a buzzword for more money. Let’s hope that the new Netanyahu government, makes the entire academic sector responsible for keeping to strict budgets.

Share with others: