Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

9 Tammuz 5762 - June 19, 2002 | Mordecai Plaut, director Published Weekly









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Shema Yisrael Torah Network
Shema Yisrael Torah Network

Opinion & Comment
A Poor Ideology that Targets Children

It is clear that strong measures had to be taken for the Israeli economy. The economic slowdown caused reduced revenues from taxes for the government, at the same time as security needs to counter the awful terrorism forced increased spending for defense. Increased volatility in international politics, including American military activities and threats of military action against Israel's enemies, require continued spending on broader, strategic defense goals at the same time as the American technology stock market bust was shrinking Israeli resources. The result is that the Israeli government's income is falling just when it cannot cut back on expenses and must even increase them.

No one knows any way to increase the government's income -- so the only possibility is to decrease outgo. Hence the "New Economic Plan" designed to reduce overall government spending by some NIS 12 billion. Since the budget passed only a few short months ago was already based on a firm awareness of economic distress, there were no easy cuts left to make.

A large part of the savings comes from across-the-board measures like raising the value added tax (VAT) by a percentage point and making a universal cut of four percent in all government departments. Yet one big chunk (over 20 percent) was achieved by reducing the child support payments made by Bituach Leumi (the National Insurance Institute).

Politically, socially and economically, the move makes no sense.

In political terms, the child support payments were introduced as a fairer way to compensate parents with many children. In the U.S., every child entitles the parent to a big exemption and deduction in taxes. In Israel, the tax savings from children is relatively small; it has absolutely no effect on the father's income tax, and only a small effect on the mother's income tax. Instead of tax savings, Israeli parents are supposed to be given Bituach Leumi payments. This was considered more equitable since everyone gets the same thing; tax savings are more valuable to those making more money anyway.

Socially, those with big families -- who will be losing the most from the reductions in child support -- are the ones least able to afford the loss. The head of Bituach Leumi estimated that 20,000 families (with 100,000 children) will fall below the poverty line as a result of the cutbacks. That means that even before the reductions they are barely getting by. Is it socially just to save the entire Israeli economy at their expense?

Economically, it is a well-established principle that money given to the poorest sectors has the biggest effect for the whole economy. When planners want to stimulate an economy, they know that it is important to put money in the hands of the lowest economic rungs, since they will spend it fastest. It certainly makes no sense to take money away from the poorest people now that the economy needs all the stimulus that it can get.

The only motive that remains is "ideological": that someone in the Finance Ministry wants to harm the chareidim, who make up a good part of the large families and who are identified with large families in the public mind. Such motives are improper, to say the least, in a public servant, and are certainly unjust when all the other arguments so strongly oppose such a move.

At the moment, implementation of the cuts are pending a court decision in a suit brought against them by Arab families and their allies.

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