Former treasury director-general Aaron Fogel, now serving as the chairman of the
, today blasted the government's economic inefficiency.
"If a company had been run the way the State of Israel is run, it would have gone bankrupt long ago," Fogel said. "The government cannot make decisions that are then attacked by its own members."
Speaking at a conference on the implications of tax reform, now under enactment into law, Fogel claimed that the real rate of unemployment is 25%, far from the 10% figure published by the state statistician.
He also claimed that the real tax rate is 75%, because from the public's perspective, value added tax on goods VAT is also, simply, tax.
"That means that in 2008," the target date by which the Rabinovitch tax cuts start in full, "tax will drop to about 60%, which is unnatural," Fogel said.
The tax reform compiled by the Rabinovitch committee, headed by accountant Yair Rabinovitch, is good, Fogel said. But the tax cuts should be implemented right away, not prolonged over five years, even at the expense of increasing if the government deficit.
On the impending budget cuts, Fogel said, "Military might can grow even if the defense budget is reduced. Behind the defense establishment stands a tremendous manpower establishment that must behave like the business sector. Not everything titled 'defense' is actually defense.
"If I were the finance minister for a minute, I'd tell everyone, stop talking about wage cuts and cutbacks and drop trying to bring down each other's prices. That kind of behavior creates a downward spiral," Fogel said.
The stability that monetary policy had achieved was artificial, he added, and came at the expense of production and growth. "In a situation of globalization, monetary policy has the ability to do nothing but harm," he said.