The gap between Israeli tax on labor and the average in the OECD has widened since 1998, a Bank of Israel study found.

The comparative study by Dr Adi Brender of the Bank of Israel looked at tax rates, including health insurance dues, and local taxes.

Brender found that since 1998, 20 of the 26 OECD nations reduced tax on labor, while Israel raised it, especially in 2002.

Denmark, Belgium and a few others do levy higher tax rates than Israel, on the wealthy.

But generally, well-to-do citizens of the OECD nations pay lower tax than Israelis in similar tax brackets.

For instance, a family with two children and one bread-winner earning NIS 24,000 a month would pay 44.6% of his income on tax in Israel, compared with 35.8% on average in the OECD.

At pay exceeding NIS 60,000 a month, the Israeli tax bill would be 54.1% in Israel, compared with 42.1% in the OECD, on average.

As said, the gap between Israeli tax and OECD average rates widened in the last three years, Brender found. Up to monthly income of NIS 24,000, the gap widened from 1% to 3%. Above NIS 60,000 a month the gap increased to 7% after Israel abolished the ceiling on national insurance and health payments.

The Bank of Israel research department concluded that the high cost of labor in Israel could deter foreign investors, and could motivate skilled Israelis to abandon ship for greener, less taxable shores elsewhere.