Tax deal signed by nine more countries

www.bethelfinance.com

The UK will be provided with a wealth of information about companies and individuals registered in well-known tax havens after nine more countries signed up to international tax protocols.

Austria, Luxembourg and Singapore, a traditionally secretive banking jurisdiction, were among the countries adding their names to a list of more than 50 countries who have agreed to automatically exchange tax information, help foreign nations to clamp down on tax debtors and allow countries to conduct wide-ranging joint multiparty tax investigations.

The Austrian finance minister, Maria Fekter, hailed the news, announced at the OECD ministerial meeting in Paris, as a "huge step forward" for her country.

She said that signing the OECD's multilateral convention on mutual administrative assistance on tax matters would "increase Austria's ability to actively contribute to the current international effort to [tackle tax] base erosion and profit shifting".

After many decades of banking secrecy which have allowed foreign account holders to veil their assets, Fekter said "recent developments" had persuaded Austria of "the importance of such cross-border co-operation in order to minimise the opportunity for international tax avoidance and evasion".

Less than a month ago, Fekter branded the UK and its overseas territories as " the island of the blessed for tax evasion and money laundering" and called for a registry for disclosing the beneficiaries of trusts.

On Wednesday, without naming the UK specifically, Fekter repeated her call for more information about the true beneficiaries of hundreds of billions of assets, saying: "We should not only focus on … access to bank information but also for the disclosure of beneficial ownership and beneficiaries of corporations and trusts and similar entities in general."

However, Singapore's deputy prime minister, Tharman Shanmugaratnam, said UK overseas territories needed to come on board to ensure the convention functioned properly: "Signing the convention reflects Singapore's commitment to tax co-operation based on international standards, but the standards can only work if all financial centres come on board. Singapore will work with international partners to achieve that, so that … offshore jurisdictions like the British Overseas Territories move together."

The new tax protocols will also affect entities based in Luxembourg such as Amazon and will eventually allow for faster transmission of data to HM Revenue and Customs and other tax authorities around the world.

Amazon continues to face questions about its company structures after it was revealed that it pays meagre amounts of tax in the UK on sales of up to £4.2bn.

The OECD secretary general, Ángel Gurría, said that rewriting international tax rules had become one of the great challenges for finance ministers as many of the old frameworks had become irrelevant.

"The [international tax] rules which we have built since the 1920s were meant to avoid double taxation … the problem is we've moved from double taxation to double non-taxation.

"Now we don't tax anybody because we've built a set of codes and regulations and law … and culture … where we facilitate the fact that co-operations, through transfer pricing practises, put their profits in low-tax jurisdictions and therefore do not pay what would be considered to be their fair share."

He said that taxing IT companies such as Google and Amazon had become especially difficult as they were based in the "ether".

"You can move anywhere and it doesn't matter where you originate the information or where you register the company, basically the consistency is that they [the companies] want to pay less tax."

Gurría, who works closely with finance minsters in dozens of countries, spoke frankly about how the financial crises had precipitated a new era of tax co-operation.

Pushed by the G20, he said, the OECD had "made more progress in three years than in the 10 years before" in getting its member countries and others to sign up.

"This [work] is not against the corporations. We want to make sure the corporations have legal certainty, that they know they are not going to be double taxed or multiple taxed, but at the same time, it is appropriate they produce their fair share for society, especially at a time of very tight budgets where ministers are having to increase the taxes and are having to cut expenses."

He said taxing the "man on the street" wasn't economically desirable or even politically possible, so for many finance ministers the only option was "to cut, cut, cut more, rather than have a proper balance between revenue and the expense".

Purchase tax on homes fills NIS 1b hole

www.bethelfinance.com/rm

At the annual conference at the Herod's Hotel in Eilat, Israel Tax Authority real estate taxes division head Shay Aharonovich at the Israel Builders Association's said : "Our job is first of all to bring in money, and people forget this."

"We are a conservative body, which knows what the real estate tax revenues are, and we know that every exemption and break will reduce revenues. We fought against the diamond merchants, but what can you do when a merchant can get up and go to Belgium or India. But real estate is a bit harder to take to another country. What can you do when there is a NIS 40 billion deficit. A Ministry of Finance official called and asked me how many apartments change hands and I told him, 30,000. So he immediately multiplied that by 3.5% to be collected through the purchase tax, and the Ministry of Finance has found another NIS 1 billion for the hole."

The Tax Authority clarified, "Aharonivich mentioned one telephone conversation, which was part of regular wide-ranging staff work carried out at the Ministry of Finance and Tax Authority before making a decision on the matter.

New Ministry of Housing and Construction director general Shlomo Ben-Eliahu said in response, "You don’t take money when the market is hottest, from a place which automatically raises the price of the product. In a second, you raise the price of apartments by 4.5%. The money shouldn’t be taken from a place that is on fire, because you're adding fuel to the fire. Yes, you need money to cover the deficit, but you're taking it from the wrong place."

Grenada Adapts VAT Regime

www.bethelfinance.com

The Government of Grenada has announced, in its Budget for 2013-14, comprehensive changes to the island's VAT regime, and proposals to introduce a Citizenship by Investment Program.

The Government has committed to a review of the VAT regime following lobbying from local businesses. The VAT waiver on imports, local businesses argue, places local purchases at a competitive disadvantage to imports. To address these concerns, the Government has committed to extend VAT concessions to locally-produced products.

Other legislative amendments will allow voluntary registration for VAT purposes by small businesses from January 2014.

In addition, the Government intends to cut the VAT rate on construction sector inputs, from May 1, 2013, until December 31, 2014, on sand; cement; roofing materials; steel; lumber; and construction blocks. Furthermore, construction services rendered for projects valued at less than XCD400,000 (USD148,000) until December 31, 2014, will be exempt from VAT.

The Government has also replaced the Manufacturers Rebate with the Manufacturers Competitiveness Program, providing for a tax rebate of 5 percent of VAT-exclusive sales for qualified manufacturers, effective from May 1, 2013.

Other proposals raised in the Budget include the establishment of a Citizenship by Investment Program, which the Government has said will mirror similar regimes in place in other Caribbean territories. The program will be developed for launch in June 2013, the Government said.

Lastly, in the second half of 2013, Grenada will launch new e-taxation services, allowing taxpayers to register for tax purposes and obtain a Tax Identification Number online, and file their monthly and annual returns electronically.

Cyprus President satisfied with EU positive feedback

www.bethelfinance.com/rm

Cyprus President Nicos Anastasiades expressed his satisfaction over the positive feedback he had from the European Council, on a request for support to be given to Cyprus so that it may overcome current difficulties.
Speaking after the European Council, on Wednesday, President Anastasiades said that from the various contacts he has had during the course of the day, it seems that European leaders understand that Cyprus needs Europe’s solidarity. 
At the same time, he added, they also understand that an eventual failure of the harsh decision taken for Cyprus would translate to a European failure.
According to the Cyprus President, European Council President Herman Van Rompuy, appeared to regard under a positive light Cyprus’ request for an increase in financial help in the context of the Multiannual Financial Framework.
During our meeting, I pointed out that given difficult economic conditions a greater EU participation is needed in co- funded programmes and I asked for his help in that direction, President Anastasiades said.
British Prime Minister David Cameron who met with President Anastasiades earlier on in the day on the sidelines of the European Council was also positive. 
He further referred to a meeting he had with European Parliament President Martin Schulz who not only fully supported our request but also referred to it specifically during the European Council calling on everyone to contribute and to work towards meeting the request.
President Anastasiades said that in an intervention he made at the European Council he thanked Schulz and noted that in the matter of EU co-funded projects Cyprus should be treated in the same manner as other countries, receiving EU assistance have been treated. 
He further noted that during the discussion on energy matters he stressed the importance of hydrocarbon reserves in the Levantine Basin and Cyprus’ prospect of becoming a regional energy hub.
He said that he highlighted the fact that the south corridor constitutes under the circumstances a safe and beneficial proposal. The discussion on the matter, he added, showed that EU leaders seem to plan to use the connection of Israel, Cyprus and Greece as one of the alternative energy routes to connect the rest of Europe. 
The Cyprus President also noted that the use of domestic energy sources and in particular of independent reserves will contribute significantly to European energy security.
Finally, he underlined the importance of the energy sector in the effort to improve the EU’s competitiveness whilst at the same time also promoting growth and the creation of new jobs. 
President Anstasiades expressed Cyprus’ support to measures included in the Commission’s Action Plan for combating fraud and tax evasion. He also said that he took the opportunity to convey the importance the Republic of Cyprus places both in the institutional framework on combating money laundering and its implementation by all European countries.
I stressed, he said, that despite the fact that Cyprus has received a positive evaluation in this area, following a request from our partners, we accepted a very detailed evaluation of the implementation of the due diligence followed by banks. 
It was with great satisfaction that we noted, he added, that the general picture which came out as regards our country from these evaluations in no way gives credit to a defamatory effort by certain circles against Cyprus recently.
Cyprus has agreed with international lenders on €10 billion rescue package, under which, it must close down the Popular Bank, and impose painful losses on deposits of more than €100,000 held at the Bank of Cyprus. Both institutions were heavily exposed to the Greek debt. 
Referring to Van Rompuy’s visit to Turkey, on Thursday, President Nicos Anastasiades said that he had briefed the European Council President on Cyprus’ readiness for talks to begin in order for a solution to be found in the Cyprus issue, after the ground has been properly prepared and enough time is granted so that the current difficult situation can be dealt with.
The Cyprus President also said that he stressed that good will measures such as the return of the enclosed city of Varosha and others would be of importance in the chances of success a new effort for the solution of the Cyprus issue would have. 

President Anastasiades put forward his views on both the economy and the Cyprus issue during all the other meetings he had in Brussels. As he said, he also met with German Chancellor Angela Merkel, and the Prime Ministers of Finland and Holland.
Cyprus was divided in 1974 when Turkey invaded and occupied its northern third. UN led talks underway since 2008 stalled on the part of the Turkish Cypriot side just before the assumption by the Republic of Cyprus of the EU Council rotating Presidency on July 1 2012.

Corporate Tax Plans for Luxembourg

www.bethelfinance.com

The Luxembourg Government has unveiled details of its corporate tax plans, designed to ensure that the Grand Duchy's tax regime remains attractive for investors.

During a recent parliamentary debate on competitiveness, the Government underlined the need to preserve Luxembourg's reputation as an international financial center that is welcoming to international investors, particularly in the area of corporate taxation.

To this end, the Government firmly ruled out the idea of increasing business tax, in order to maintain a stable business climate, favorable to the creation of jobs, and therefore to growth and to generating appropriate levels of fiscal revenues, flowing from income tax and from the indirect tax on the production of goods and services.

Underlining its proactive approach, the Government explained that it is constantly reflecting on Luxembourg's future economy and on its taxation, in particular the taxation of intellectual property and the digital economy. The Government is considering the idea of modifying the current tax treatment of intellectual property, for example, it said. The Government also revealed plans to improve the tax environment for innovative companies, particularly as regards the initial capital required by start-up companies.

Alluding to Luxembourg's large dependence on sectors with high added value, which often require a highly-skilled workforce, notably in the launch phase, the Government announced plans to adapt the Tax Administration's circular pertaining to the taxation of highly-qualified workers. The Government aims to guarantee a competitive and attractive tax regime for experts that come to Luxembourg for a limited period to strengthen Luxembourg's savoir-faire, it noted.

Finally, the Government confirmed plans to further modernize and simplify tax procedures for companies, ensuring a high level of computerization in the country's tax administration.

The Government also emphasized its intention to take keen note of the latest developments at international level in the area of taxation, and to listen attentively to financial center economic actors, to make sure that it adopts a proactive and reactive approach in the area of taxation at all times.

Business slump in May leaves France mired in recession - PMI

www.bethelfinance.com/rm

French business activity retreated again in May despite a slight improvement in manufacturing, a survey showed on Thursday, offering little hope of a quick exit from recession in the euro zone's second-biggest economy.

Data compiler Markit said its preliminary composite purchasing managers index, covering activity in the services and manufacturing sectors, was unchanged in May at 44.3, far below the 50-point line dividing expansions in activity from contractions.

Markit chief economist Chris Williamson said business activity remained far too subdued to declare the end of the downturn in sight.

"There is just a lack of belief that the situation is going to improve any time soon," he added. "There is strong dissatisfaction with the government and its handling of the economy."

The survey showed a slower rate of decline in the manufacturing sector, which saw its reading rise to a nine-month high of 45.5 from 44.4 in April, also beating economists' average expectations for 44.8.

The larger services sector, which accounts for more than half of French economic activity, saw its index remain unchanged at 44.3, falling slightly short of expectations for 44.5.

In one positive sign, the flow of overall new business improved slightly in May thanks mainly to a slower rate of decline in manufacturing new orders.

France entered recession in the first three months of the year, posting two consecutive quarters of contraction in economic output.

The 2 trillion euro economy has struggled as business and household confidence have crumbled in the face of record jobless claims and rising taxes.

Williamson said the May PMI figures suggested the economy would contract at a rate of 0.5 percent in the second quarter, though he said the PMI data have painted a gloomier picture than GDP figures recently.

The government is hoping the economy will grow 0.1 percent this year, though even President Francois Hollande has acknowledged that the country would be lucky to achieve that.

France Boasts Success Of CICE Tax Credit Pre-Finance Scheme

www.bethelfinance.com

The French Finance Ministry has highlighted the success of the Government's pre-financing mechanism for the new tax credit for competitiveness and employment (CICE), three months after the scheme was launched.
According to the Finance Ministry, as at May 14, 2013, 2,670 requests for CICE pre-finance had been submitted, for a total sum of EUR 488m ( USD 628m ). So far, 1,850 businesses have received pre-finance totalling EUR 191m, while 574 files are currently being examined, with pre-finance requests amounting to EUR 145m, and 246 requests pending (EUR152m). Public bank Oséo currently receives almost 100 new requests for CICE pre-finance every day.

The CICE pre-finance mechanism aims to give immediate cash flow support to companies in France, by allowing Oséo and commercial banks in France to finance up to 85% of the CICE tax credit in advance. The measure is simple. Firms are merely required to provide details of their company registration documents, together with their latest balance sheet and payroll evidence, to the regional Oséo office, or to their commercial bank. Alternatively, businesses may apply via the CICE Oséo Internet Link. The turnaround period, being the time taken from submitting a request to the actual payment date, is swift.

The scheme was made available to all companies in France, irrespective of their size, on April 5.
A banner feature of the Government's national pact for growth, competitiveness and employment, presented by the French Prime Minister on November 6, 2012, the CICE amounts to a reduction in social contributions for corporations, and aims to give companies the means with which to improve their competitiveness and to support employment.
Included in the 2012 supplementary finance law, the CICE entered into force on January 1, 2013, and will allow 1.5 million companies in France to benefit from tax credits of EUR 13bn in 2013 and EUR 20bn in 2014.
The CICE tax credit amounts to 4 percent of gross payroll for remuneration equal to or below 2.5 times the minimum wage in 2013, rising to 6 percent in 2014. The rules will be the same as for general reductions in social contributions and for the research tax credit with which companies are already familiar.

Tax the rich and levy an estate tax

www.bethelfinance.com

Ishay Davidi, First Israel Mezzanine Investor Fund CEO, at the "Globes"-BDO Ziv Haft Capital Market Conference in Tel Aviv yesterday, said : "The calculations are very clear: people who earn more than NIS 40,000 should pay a 5% surtax, and people who earn more than NIS 100,000 should pay a 10% surtax for a set period of two years. This will make it possible to lower the tax rates on lower income-earners, or cut VAT. An estate tax should also be levied. There is no reason why Israel should have this tax."
Asked about Yair Lapid's performance as Finance Minister so far he said, "For someone who is six weeks in the job, it is premature to give a grade. I admire Yair Lapid, who left his job to enter the public sector. I strongly agree with the need to lower the deficit, which is critical for a country like Israel. My only comment about the budget is that it should hit the rich more than wage-earners and the middle class. People who work honestly and fairly can contribute more in the next 2-3 years."
Davidi was among the tycoons who backed Lapid before the elections.
  

The trend in the dollar on world markets is the main factor affecting the shekel-dollar rate

www.bethelfinance.com/rm

The shekel has continued to weaken against both the dollar and euro in morning inter-bank trading today. The shekel-dollar exchange rate has risen 0.13%, compared with yesterday's representative rate, to NIS 3.665/$, and the shekel-euro exchange rate has risen 0.33% to NIS 4.724/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.66/$, up 0.44% on Friday's rate, and set the shekel-euro representative exchange rate at NIS 4.708/€, up 0.46%.
In international markets, the dollar has weakened 0.15% against the euro to $1.2891/€, is unchanged against sterling at $1.5253/£, and has strengthened against the yen to ¥102.48/$.
The foreign currency market is still reverberating from the Bank of Israel's unexpected interest rate cut of 25 basis points last week to 1.5%, the lowest rate in three years. Market source believe that the Bank of Israel will announce another interest rate cut, to 1.25%, at the regularly scheduled date next Monday, in order to fight the strengthening of the shekel.
Prico Risk Management and Investments CEO Yossi Fraiman believes that the Bank of Israel will not announce an interest rate cut at the upcoming decision, "preferring to save its ammunition for when it will be needed to stem the strengthening of the shekel, or to stimulate economic activity."
FXCM Israel said today that the trend in the dollar on world markets was the main factor affecting the shekel-dollar rate. "Last week's breakout by the dollar on world markets may indicate an upward turnaround. The dollar is strengthening because of growing signs that the Federal Reserve is drawing up a plan to reduce its quantitative easing, and that it is getting the financial market used to the idea."
     

Sterling hits 7-week low as UK inflation undershoots forecasts

www.bethelfinance.com

Sterling fell to its lowest in seven weeks against the dollar on Tuesday after data showing British inflation undershot expectations in April, giving the central bank more leeway to ease policy in coming months.
Britain's inflation rate fell to 2.4% in April from 2.8% in March, with almost half of that drop coming from weaker petrol and diesel costs, and well below expectations of a 2.6 % reading.
Sterling fell to $1.5140 from $1.5212 as traders took the data as giving incoming Bank of England chief Mark Carney more room to ease monetary policy later in the year. The euro rose to 84.75 from 84.58 pence.
The pound has lost 6.7% against the dollar since the start of the year as the U.S. has shown more sustained signs of a recovery than the UK.
That has led investors to speculate that the Federal Reserve may phase out its bond-buying programme later this year. In contrast, the Bank of England is expected to expand its stimulus if a nascent recovery stalls anytime soon.
" The new governor will no doubt be keen to make his mark when he starts in July, and he may well opt for additional quantitative easing to further aid recovery," said Andy Scott, account manager at HiFX, a currency and cash deposit service provider.
" This possibility continues to hamper sterling's recovery from its dreadful start this year."
The pound had fallen to $1.4832, a 2-1/2 year low in March, but has since recovered. Its bounce could be losing momentum, partly due to growing doubts over Britain's relationship with its largest trading partner, the European Union.
A recession in the euro zone is also likely to keep investors wary of the pound, especially against the dollar.
Recent data has shown that the British economy is on the mend, having avoided a triple-dip recession, but risks of a euro zone recession could hamper a sustained recovery.
" Tomorrow's BoE minutes will be of interest in assessing the impact of recent positive data on the Monetary Policy Committee's stance towards further quantitative easing," Morgan Stanley said in a note. " Overall, we expect the sterling/dollar decline to be extended towards $1.4840."

Cameron Warns Over Transparency

www.bethelfinance.com/rm

 Britain's offshore tax havens have been warned to enforce regulations and improve transparency to avoid evasion by individuals and companies.
The Prime Minister has written to nearly a dozen leaders of the havens, stressing the need to "get our own houses in order" as he pushes for international action to tackle avoidance schemes.
In a message to 10 Crown Dependencies and British overseas territories, David Cameron said he backed their right to be low tax jurisdictions but insisted that rules needed to be set and enforced fairly.
The move comes ahead of next month's G8 summit in Northern Ireland, where David Cameron will push for an agreement aimed at clamping down on tax evasion and avoidance.
He said he wanted the G8 to "knock down the walls of company secrecy" to reveal who really owns and controls firms.
Mr. Cameron's initiative came as he prepared to raise the issue of corporate tax dodging with Google ( NasdaqGS : GOOG-news ) boss Eric Schmidt at a meeting in Downing Street.
The internet giant's executive chairman is a member of Mr. Cameron's Business Advisory Group, which has its regular quarterly meeting today, just days after Google was given a mauling by a House of Commons committee over its tax affairs.
The group holds its meeting behind closed doors and Downing Street does not reveal the content of its deliberations.
But a source inside Number 10 confirmed tax will be up for discussion, insisting that "nothing is off the table" when David Cameron meets the group of 16 business leaders.
The  Prime Minister's letter calling for more transparency about tax information and the ownership of companies was sent to leaders in Anguilla, the British Virgin Islands, Bermuda, Gibraltar, the Cayman Islands, Montserrat, the Turks and Caicos Islands Jersey, Guernsey and the Isle of Man.
" As you know, I have made fighting the scourge of tax evasion and aggressive tax avoidance a priority for the G8 summit which the UK is hosting next month.
"With one month to go, this is the critical moment to get our own houses in order.
"I am looking to all the overseas territories and crown dependencies to continue to work in partnership with the UK in taking the lead on two critical issues : tax information exchange and beneficial lownership", Mr Cameron wrote.
David Cameron told the leaders : " I respect your right to be lower tax jurisdictions. I believe passionately in lower taxes as a vital driver of growth and prosperity for all.
" But lower taxes are only sustainable if what is owed is actually paid-and if the rules to achieve this are set and enforced fairly to create a level playing field right across the world.
" There is no point in dealing with tax evasion in one country if the problem is simply displaced to another."
He welcomed commitments made by the territories to exchange tax information but said there was also a need to improve to its quality and accuracy.
He said : " Put simply, the means  we need to know who really  owns and controls each and every company."
" This goes right to the heart of the ambition of Britain's G8 to knock down the walls of company secrecy."
Labour leader Ed Miliband has pledged to write new rules to tackle corporate tax dodgers if the wins the next election, even if there is no international consensus for action.
In a interview with the Observer, he said Mr. Cameron's government was "dragging its feet" on the issue.


    

No surprise Israel tops OECD poverty table

www.bethelfinance.com

"No one in Israel should be surprised that Israel tops the poverty rankings. This is the direct result of economic and budget policies which benefit the rich and hurt the poor," Professor Momi Dahan, the head of the Federmann School for Public Policy and Government at Hebrew University of Jerusalem told "Globes" in a special interview, in response to last week's OECD report, which states that Israel has the highest rate of poverty among its members, higher even than Mexico and Turkey.
 Momi Dahan appears to be ashamed of the results, but he says that he was unsurprised by them. He says that anyone who analyzes Israel's economic and budget policies of the past ten years would see how Israel achieved the dubious ranking, and he makes an even more alarming prophecy: the economy policy of the new budget will worsen the situation. He says : "The most important point when reading the OECD report is to realize that Israel's high poverty rate is primarily a direct function of the distorted structure of the state budget, both in terms of government spending and in terms of taxes."
"Indirect taxes (VAT, the purchase tax - A.F.) collected from the poor are relatively higher than in other OECD countries, while conversely, property and income taxes (direct taxes, such as the income tax and the companies tax - A.F.), which target the wealthy, are lower than in other developed countries", Dahan added.
As for the argument that when calculating Israel's poverty rate, data for Arabs and the haredim (ultra-orthodox) should be excluded, Dahan says, "It should be realized that even without them, Israel's poverty rate is 60% above the OECD average. Anyway, excluding them is immoral."
"There is a dramatic change here," says Dahan. "This is the first time that the OECD, which is very conservative in its global outlook, explicitly says that welfare payments do not cause poverty or are an incentive not to work. For the first time, the report says that without assistance for the poor, poverty would be greater, not less. This is a dramatic change by one of the most conservative organizations in the world. In effect, Israel has become the most conservative institution in the world because it is the only one which believes that cutting welfare payments is the cure for poverty."
Moreover, "The tax proposals included very regressive taxes in the form of a higher health tax and National Insurance payments, which are taxes for all intents and purposes, on housewives who have no income at all. This is something new in the world: levying a poll tax, which was once prevalent, and Israel is setting an example for the world," added Dahan.
Dahan is especially angered by the cut in the child allowance, saying, "On the expenses side, one of the biggest items is the cut in the child allowance, which targets the poorest. This cut is not because Israel's welfare payments are high, and should be reined in. On the contrary, they are the lowest in the developed world. The average welfare payment in Israel is €38 (for the first three children), compared with €80 in the UK, €120 in France, and €190 in Germany."
Professor attributes the cut in the child allowance to "the concept that a further cut in the child allowance will reduce poverty, completely contradicting Israel's experience since the program began in 2003."
Dahan is also angry about how the budget was submitted, saying, "A budget is submitted to the government, which votes on it, even though it does not receive the most basic information on how the budget - NIS 300 billion, which is not small change - will affect inequality and poverty in the coming years. The ministers voted with their eyes closed."
 Momi Dahan is also unsparing of new Minister of Finance Yair Lapid, saying, "Here comes a new finance minister, one of whose claims is that he did not know how big the deficit was - and I believe him. I would therefore have expected him to increase transparency in the budget decision-making process. But this budget process is suffering from all the illnesses of its predecessors. The first example is that there is insufficient information about key variables. Furthermore, some of the items in the Economic Arrangements bill do not include information about their effect on the budget, even most of the items!"
         

Israeli economy grew 2.8% in Q1

www.bethelfinance.com/rm

Gross Domestic Product grew at an annualized rate of 2.8% in the first quarter of 2013, seasonally adjusted from the previous quarter, following a 2.6% growth in the previous three months and a 2.8% increase in the third quarter of 2012, Israel's Central Bureau of Statistics said on Thursday, according to initial estimates based on partial data received so far.
The Central Bureau of Statistics data further revealed that the business sector GDP grew at an annualized rate of 2% ( following a 3.4% increase in the previous quarter and a 2.9% increase in the third quarter of 2012), private spending rose 5.6%, exports jumped 13.5%, investment in fixed assets dropped 14.7%, and government spending slid 7.3%.
According to the Central Bureau of Statistics, the rise in GDP in the first quarter of the year reflects an increase in exports and private spending, a moderate rise in imports and declines in investment in fixed assets and in government spending.
The Central Bureau of Statistics added that these findings should be taken cautiously due to sharp fluctuations in quarterly data, which make it difficult to analyze trends and locate turning points in Israel's economic activity.
Imports of goods and services rose 2.5% in the first quarter of the year, following a 14.9% decrease in the previous quarter.
This increase reflects moderate growth in the import of civilian goods at an annualized rate of 1.8%, and at an annualized increase of 42.6% in the import of services ( including software services, transportation, communications and tourism services ).
The import of goods and services excluding security-related imports, vessels, aircraft and diamonds, dropped 2.6% in the first quarter of 2013, following a 14.3% annualized drop in the previous quarter.