Israel Matzav

Working for the government more than for myself

For those of you who think that I complain too much about the high taxes here in Israel, have a look at this:

"With Tax Freedom Day occurring nine days sooner in 2006 than the previous year, I had hoped that 2007 would continue this trend and be an even better year for taxpayers. Unfortunately, we seem to have gone backwards and the trend is continuing," said Corinne Sauer, director of the Jerusalem Institute for Market Studies, which calculates "Tax Freedom Day" in Israel. "It is often joked that people spend more time working for the government than for themselves and their family. Unfortunately, in Israel, it is true."

Do you remember August 2? That's the day, 214 days into the year, that the institute says Israelis became free of their tax burdens, with every agora earned until that day basically going straight into the government's coffers; only then did locals start earning money for themselves.

In the early 1990s, the institute said, Tax Freedom Day occurred in mid-July, but over the past 17 years it has come later and later, with four exceptions in 1996, 1998, 2003 and 2006.

And, in each year since 1990, the first year for which calculations are available, Israeli taxpayers have worked more for the government than for themselves, according to the institute.

The figures are among the worst for developed countries. In comparison, the US celebrated Tax Freedom Day 2007 on April 30, 95 days prior to Israel, while in the UK the day the nation as a whole earned enough to fund its annual tax burden came on June 1, 63 days before Israel. Even Norway, which is known for its high tax burden, celebrated four days prior to Israel on July 29.

Based on the 2008 state budget draft just passed by the cabinet, the largest in Israel's history, Tax Freedom Day will be even later next year.

And for those of you who are going to rush to say, "but the defense budget...." Think again:

"This is bad news for Israel," said Sauer, who added that the country's high tax burden could not be attributed solely to the security situation. "Despite a socialist past, the economic liberalization of the formerly socialist countries of Eastern Europe prove that a lower tax burden is possible."

In the Czech Republic Tax, this year's Freedom Day was observed on June 11, while Estonia marked the day on April 24.

There's no requirement to file tax returns here either unless you are self-employed, the owner of a corporation or have an extremely high salary. The marginal tax rate hits 48% at NIS 11,000 per month (NIS 4.2 = $1 approximately). What do you think that means?

posted by Carl in Jerusalem @ 9:04 AM