Prof. Aviya Spivak: “We foresaw that the current government had raised taxes too high and we published our position at the time. We said that there would be surplus taxes.” The Marker, 14.11.2013

Prof. Aviya Spivak and Prof. Michel Strawczynski speak in response to the announcement that the national budget for 2013 had a surplus of at least NIS 12.5 billion. Prof. Spivak argues that the government should not rush to lower taxes following the discovery of the surplus. The correct thing to do is to maintain a fixed taxation policy at the same average level throughout the business cycle—a level that will be suitable for both good and less good economic periods. This would be preferable to the current policy, according to which the government raises taxes in times of crisis and lowers them when there is a surplus, thus intensifying the effects of economic crises. Prof. Strawczynski argues that in recent years there has been a structural deficit in the national budget, that is, a fixed gap between tax revenue and expenditure, caused by the fact that the expenditure is growing faster than the revenue. Therefore, the surplus discovered in the 2013 budget should lead not to rash decisions but rather to long-term investments, such as investment in education for the Arab and ultra-Orthodox sectors that would adapt their skills to the needs of the economy.

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