A tough choice: security or society

The Finance Ministry has proposed reducing Israel's defense budget by NIS 2 to 3 billion, claiming that the defense establishment has accumulated fat that can be trimmed and applied toward social purposes. Defense Minister Ehud Barak, meanwhile, claims that the defense budget cannot be reduced, but should in fact be increased.

At a time when the state expects a decrease in revenues and must cope with the global financial crisis, Barak proposes increasing the state budget by 35 billion shekels, which would strengthen both the country's social system and its security apparatus.

Both of these approaches are mistaken.

No one can deny that Israel's geopolitical surroundings are unstable. And no one can predict what will develop in the region, or to what extent the unruly energy raging on the streets of Cairo will translate into another security threat. There is no doubt that investments in the Israel Defense Forces will save lives in the future.

Get the Israel Hayom newsletter sent to your mailbox!

If the defense budget is indeed bloated, and it would be safe to assume that this is the case, why not take the surplus and channel it toward improving Israel's defenses and deterrent power, which we clearly need? After all, extensive cuts to the defense budget don't necessarily guarantee that the fat is what will go; instead, crucial projects could be the ones to suffer for the sake of organizational convenience. Rather than significantly cutting the defense budget, it is preferable to improve its capabilities using the existing resources it is afforded.

However, if we follow this approach, where will we get the resouces to fund the social needs outlined by the Trajtenberg Committee and others? The answer is from the excessive, impractical and unjust tax break given to Israel's richest and most established industrial plants that amounts to no less than 6 billion shekels, all under the guise of "the law for the encouragement of capital investment."

This perk isn't even given in exchange for any new investment. Every industrial plant that exports 25 percent of its output enjoys an excessive corporate tax break that has no equal anywhere else: only 6 percent tax if the plant is located in an industrial zone and 12 percent if it is in central Israel. This is in comparison to the 25 percent tax rate for the rest of the country's business sector. Powerful, centrally located plants, those that are traded on the stock market, bring in billions and have no problem raising capital around the world, account for about 73 percent of those who reap this tax benefit.

Before slashing the defense budget or making decisions about social issues, this tax exemption take its place at the center of public discourse. A perk that amounts to 6 billion shekels can easily be cut in half, freeing up 3 billion shekels that can be contributed to the national budget.

We don't need to cut the defense budget or to increase the state budget by 35 billion shekels. Instead, we must engage in serious, far-reaching work that will make the defense establishment more efficient and minimize a costly, unnecessary tax break.

Like our newsletter? 'Like' our Facebook page!

טעינו? נתקן! אם מצאתם טעות בכתבה, נשמח שתשתפו אותנו