תמיכה בעצמאים ובעסקים בקורונה

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A couple married for 50 years was asked the secret to their happy marriage. The husband volunteered to answer and said that from the beginning, they agreed that he would make the big decisions and his wife would make the small decisions. For example, she decided where they would live, how many children they would have, what each of them would study, and where they would work. They asked the husband, "What are the small decisions?" So, what are the big decisions that you make? The husband answered proudly, "I decide who will coach Maccabi Tel Aviv, who will be in the starting lineup, what the Minister of Defense will do against Hamas, and so on."

I don't want to sound like "that husband," but after much thought (I'm currently in charge of dog walking and spending this time reflecting), I'd like to share some thoughts with you on what I believe the Israeli government should do regarding business support.

Should freelancers and companies even be supported?

There are many self-employed individuals in the country who feel discriminated against in one way or another by the state. I am not one of them. A self-employed person does not pay more taxes than an employee.. Perfectly independent Feels The tax payment more than an employee. An employee receives a salary of, say, 15,000 shekels (gross), and from that, 10,000 shekels net enter their bank account, which they manage throughout the month. From their perspective, the 5,000 shekels that went to income tax and national insurance are invisible, and they hardly notice them. A self-employed person, on the other hand, will receive monthly An income of 15,000 shekels each month, and at the end of those two months, he will join To write a check in his own name 5000 * 2 = 10,000 shekels for income tax and national insurance. When a person needs to take money out of their pocket that was already there This is much more painful Just not accept the money in the first place.

In my opinion, this is the main problematic feeling for the self-employed. I have put aside the VAT issue because I have already discussed it here:

Another point is that self-employed individuals are not eligible for sick leave and unemployment benefits. It should be noted that while the insurance a self-employed person receives from National Insurance is inferior, they also pay less. In the example below, we compare the National Insurance amount a self-employed person would pay versus an employee, assuming both have a gross income of 15,000 shekels:

It can be seen that for the same income, the self-employed individual will pay 49 shekels less each month. In my opinion, because it is technically almost impossible to pay self-employed individuals for sick days or unemployment without creating an irresistible temptation for the public to intentionally manufacture illness or unemployment, for example, when there is a business or just a couple of days with low income. Think about a mortgage consultant who had no clients for three days. This is too great a temptation to leave to their discretion if they could get a doctor's note and receive payment for those days. Therefore, it seems reasonable to me to charge less money from the same self-employed individual. A self-employed person who sets aside these 50 shekels will essentially be able to fund a day and a half of full paid sick leave each year. Is that enough? I don't know. On the other hand, the whole essence of Independence She Responsibility. From the outset, when you choose to be, for example, a private mortgage consultant instead of a bank mortgage banker, or an independent air conditioner installer instead of an installer for an air conditioning contractor, you should have considered all the advantages and disadvantages of each employment method and chosen the alternative that best suits you.

To get the information, choose, and then complain about the disadvantages of alternative X while ignoring its advantages - and there are of course many advantages - is, in my opinion, the wrong way to live life.

And yet? Should the self-employed be helped?

After all this introduction, it’s important to remember that the small business sector (including the self-employed and micro-enterprises) employs approximately 60% of the country’s workforce. If we were to tell small businesses, “You should have thought of this on your own; now you’ll have to figure it out yourselves,” then many employees would also be left without jobs. The same government that refused to support small businesses will then have to pay their employees unemployment benefits. Unemployment, of course, also carries very heavy costs beyond the financial ones; in other words, aside from direct payments to the unemployed, we will later have to address the rise in depression rates, alcoholism, domestic violence, and other social ills.

More than that, a small business owner took into account various risks and acted accordingly. He saved money for days when there would be less business, he saved money for days he would be sick, and so on. I think if you had asked most citizens of the country and its decision-makers just four months ago, what is the likelihood that the Israel Police would issue tickets to people leaving their homes, they would have looked at you like you were crazy. In fact, even a business owner who told himself, 'I'm opening my restaurant despite the fear of this or that disease," would not be able to do so because of orders issued by the state. In cases where the state issued orders prohibiting business activity, or even because such activity could not be carried out, for example, in the Gaza envelope due to life-threatening risks, assistance is provided to businesses and not just to employees, and there is, as mentioned, a lot of logic in this.

So? Should the state reach into its pocket?

One of the most infuriating things to me in the discussion about aid to businesses is the statement that the state Put your hand in your pocket. This is a sentence that usually indicates a lack of understanding of reality, even though it is common in the economic press. The country has no general pocket. The State of Israel has debt (one of the smallest in the West, but debt nonetheless). It does not have money it can use to provide support. The state does not reach into any pocket other than those of companies and citizens. The state takes money from there through its taxes and redistributes it according to its priorities. If the government decides to support businesses, it will increase the debt and the interest payments on this debt, and accordingly, it will have to collect more taxes from those who received the aid. In essence, a distribution of, for example, one hundred billion shekels as aid to businesses and citizens is equivalent to a new loan that will fall upon every citizen (for simplicity, one hundred billion divided by 8 million residents - 12,500 shekels) which they and their children will have to pay in the future by increasing tax payments. In other words, it's not clever to say For the state to reach into its pocket. Everyone needs to ask themselves if they are prepared for such a move if their income tax increases by, say, 100 shekels (this is just an example number). Everyone wants help, but there's no benefit without a cost (this law isn't just true in economics but also in physics, for example). The Second Law of Thermodynamics. In my opinion, there is no choice but to carry out such a move despite its cost. Simply put, the damage of not carrying it out will be greater than the cost of carrying it out, as mentioned. There is always a cost that the citizens pay, not the state.

How should business assistance be provided?

The press has reported on various aid frameworks, such as a tax exemption for X months. The traditional government approach is to roll the problem onto someone else and then negotiate for additional compensation. For example, a tax exemption would be granted by the municipalities, which would then have to negotiate with the government for compensation for themselves. A tax exemption is a poor form of assistance in my opinion. Property taxes are paid according to the size of the property. The damage from Corona is not related at all to the size of the business owner's property. There may be a large property that is losing money. Such a business was barely affected by Corona, but it will receive a much higher payment than, for example, a singer or a lecturer whose entire business activity has stopped completely, but they will not receive any assistance under this framework because they operate from a room in their home.

Another traditional government method is requiring the filling out and submission of various complicated forms, waiting for approvals, and receiving assistance. This method generally causes the wealthy to hire accountants, lawyers, and so on, and ultimately receive the full assistance they are entitled to (if not more), while businesses that were truly most in need of assistance will not hold out until they receive it at all.

Member of Knesset Nir Barkat's proposal To the best of my knowledge, this has never been done before in a program providing assistance to businesses. The beauty of the proposal lies first and foremost in its simplicity. According to Bareket, the government already knows how much each business earns each month through the VAT report that the business submits once every one to two months. The Treasury will take the revenue from January-February and compare it to the revenue from March. For a business that experienced a decline of more than 50% in revenue, the taxpayer (a better way to refer to it than "the government") will receive a percentage of the revenue decline, as determined by the government. No forms, no bureaucracy. It’s that simple. I hope this proposal is accepted and, along the way, will also encourage businesses in the future to truly report their revenue accurately.

This is the method I would choose tomorrow morning if I were the next Minister of Finance of the State of Israel.

Leave the country, what do I need to do?

After so much talk about what the state should do, the responsibility for our lives and well-being ultimately lies not with the state but within ourselves. I want to invite you to a webinar with two other business owners:

Entrepreneur, owner of a law firm, attorney Guy Mendelson

Keren-Or Erezi – the only contractor I know. Owner of a construction, architecture, and architect guidance business.

In my opinion, it will be very interesting even for those who don't (yet) have a business. Ultimately, managing a business and managing one's family finances are quite similar things: if you don't know marketing and sales, your child won't get into the shower; if you don't treat your job as an employee as if it were your own business, you're likely to progress slowly, if at all, etc.

Questions? It's best to post them in the comments below so everyone can benefit from the answer. You can also email me at rimon@effm.co.il or call 054-5232-799. Rimon