Changing the Reality of Israeli Socioeconomics 
Food for Thought in a Reality 
Where Knowledge is Key
Every person deserves a few basic
guarantees in life
Food, housing, education, medical care.
The State is the body responsible for
providing these basic needs to its citizens.
Today, Israel's citizens are less and less
capable of attaining these basic needs.
which is the main issue behind the
many recent demonstrations and protests.
The government's response is, "The budget
isn't big enough to cover everything."
The government is putting forth an image
of the budget as that of a household's:
What you bring in is what you can spend.
If you didn't make enough, you have
to cut expenses and tighten the belt.
But a household's economy is not
identical to a State's economy.
Who and what sets the government budget?
The budget is set by fiscal policies which define
the size and breadth of the budget and tax collection.
How is fiscal policy set in Israel?
By fiscal laws that have been drastically 
and systematically changed in the past decade.
The first law, which was passed in
2003, is called "The expense ceiling"
The state budget needs to constantly grow 
in relation to natural population growth.
The law limits the State's budget growth according to
the size of the budget in the previous year.
The limit on the budgetary growth in 2011-2012
is 2.66% relative to the previous budget.
The law ignores the
natural population growth.
Israel is the only country in the
world that passes these kinds of laws!
The second law, that was changed in 2004, 
was the law to decrease the deficit.
Sounds promising, right?  Wrong!
A State has revenues and expenditures
Deficit is the gap between a
state's revenues and its expenditures.
In the building of a State's yearly budget there
needs to be a percentage included for deficit,
as a budget for development and growth.
This is similar to a business which invests in
product development before it generates revenues.
Every developed nation includes a certain
percent of deficit in its budget:
For instance, in 2010
France had a deficit of 8.6%
Israel currently aims to bring
the deficit to 1% by 2016
By doing so, the State
cannot grow on its own.
The third fiscal law that was tightened in 2011 is
essentially an outline for lowering direct taxes.
95% percent of a state's budgeted
revenues is made up from taxes.
It is important to distinguish between
two types of taxes in the economy:
direct taxes and indirect taxes
Direct taxes - scaled taxes 
collected in proportion to income
An example being income tax, in which a
higher salary has a higher tax percentage.
A person whose income is below the
minimum doesn't pay direct taxes at all.
Indirect taxes - Collected from every citizen without
regard to income size or expenses,
an example being sales tax.
Everyone pays the State a certain percentage
of every purchase in an equal manner.
The Israeli government is consistently lowering the
direct taxes at the expense of indirect tax increase,
which deepens inequality in society.
To sum up:
The expense ceiling limits the budget
The deficit is getting 
significantly smaller every year
And the tax burden is being
saddled on indirect tax payers,
which means the middle and lower class
Nowadays in order to reach a
reasonable standard of living,
a person must fulfill his
basic needs out of pocket,
private education for his children, private
medical care for his family, expensive food, housing...
If so, who is benefiting from this policy?
It's good for those who have, or
more accurately, those who have a lot!
This situation is a product of deliberate policy
to continue to widen the societal gaps
It is also possible for things to be
different.  Our future is not yet written.
It is possible to begin to design
foundations to balance the economy,
building a much more just,
equal and democratic society!
It all depends on our
choices and our actions.
Those who know and understand can be
decisive, have influence, and make change.
We invite you to read the
'Litmus Test' document
an indicator which produces criteria
for reviewing existing policy
and proposed changes to
the socio-economic system.
This resource is presented as an invitation
to dialogue by the Dror Israel Movement.
Pass it along to your friends
