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Smart taxation centered on tax benefits and investments in the taxpaying, working and donating public are simple economic solutions that can stop the rush to relocation.
Against the background of the voices for a fundamental change in the tax policy that will make it easier for Israelis and prevent departure and "brain drain", it is time for the State of Israel to take a brave step and carry out a real tax reform, which will make Israel feel a sense of appreciation, belonging and recognition for their giving for the country.
These are the main points of such a reform that should be built from several stages.
First step: grant to encourage studies and work in Israel in targeted professions
Encouraging studies in Israel for preferred professions such as fields of technology, medical engineering, AI, cyber and innovation.
These are fields that are very necessary for the country, professions that many Israelis study abroad, or study in Israel with the goal of working abroad in these sought-after professions, so a way must be found to keep the brains in Israel.
One of the ways is through tax benefits for Israelis who study in Israel and stay to work in Israel for three years after graduation (under the heading "working academics"), and a more significant tax benefit for those who persist in working in Israel for a longer period of time, for example seven years, under the heading "working academics persistent".
Such periods of time can create integration of the worker in the Israeli economy and when he reaches an older age, settle down in a good and established workplace, along with starting a family, two things that cause fewer people to relocate.
"The economic cost of curbing the relocation will be significantly less than the damage caused to the country from the brain drain"
Second stage: Work incentive grant in Israel for those released from the army and national service
Today, the existing tax benefit is by providing credit points, for 36 months after release, with the tax benefit ranging from NIS 242 per month to NIS 484 per month, depending on the length of service.
In order to encourage Israelis to stay and work in the country, the tax benefit should be much higher, and over time.
After all, the salary of most of the discharged is low and does not reach the tax threshold, when some of them go on a trip overseas after the army.
The result is that the majority of the eligible population does not take advantage of the tax benefit provided today.
In order to encourage staying in Israel, more significant tax benefits should be given to people who work in Israel while extending the date of taking advantage of the entitlement, for a period of seven years as mentioned, during which those released from the army or national service settle in the country and establish themselves.
Such a grant at an older age will be more significant for a person with a family unit, a mortgage and children he needs to support.
Angel.
Grant or credit points for parents who served in the army, and have children who served or are serving/martyrs
Third step: Grant of second generation tax benefits for continuing military servicemen
Grant or credit points for parents who served in the army, and have children who served or are serving.
Beyond the connection and family values, this is a long-term process that can connect the family unit and family identity to the values of protecting the state, contributing to the state over many years, and receiving recognition and financial appreciation from the state.
You should also consider giving a financial grant and/or credit points to the next generation that serves.
And how are these tax benefits financed?
All the benefits will be given as part of a real reform of the credit points system in Israel and the tax benefits given to the population that serves and protects the state, and/or a population that contributes to the Israeli economy in certain professions.
This is a real economic plan that will help these sectors, move the economy forward, and also increase the values of the contribution and security to the State of Israel.
This is an investment for everything, when the economic price invested in curbing the brain drain for relocation is significantly smaller than the damage caused to the country when they move from Israel to other countries.
The writer is a managing partner of the taxation division at the consulting firm AUREN Israel.
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Tax Benefits