Minister Hirchson's Reform Package

The Finance Minister's reform package seeks to reduce poverty by encouraging employment and to stimulate growth by reducing the tax burden on the middle class.

Finance Minister Hirchson's recommendations offer two packages of reforms.

Poverty Reduction and Self-Sufficiency

In Israel, there is a high incidence of poverty among the unemployed, women, and elderly. The first package of reforms seeks to reduce poverty and promote self sufficiency by integrating these groups into the work-force. To accomplish this goal, the minister recommends:

  • a negative income tax coupled with vigilant enforcement of the minimum wage law to encourage the unemployed to move from welfare-to-work.
  • mandatory savings for pensions for all workers, ensuring that upon retirement, they will have an independent income.
  • increased subsidies for daycare provision so that women can enter the workforce.

Lower Taxes on the Middle Class

The second package of reforms stimulates growth by reducing taxes on the middle class. It is designed to maintain government revenues at approximately the same level.

  • Taxes on the middle class will be gradually decreased over a multi-year period.
  • The tax burden on those using leased company cars, an overwhelmingly wealthy group, will be increased to match the tax burden on owners of private vehicles.

The Minister's Speech (Hebrew)

The Reform Package (Hebrew)

The Government's decision to approve the reform