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What is Israel’s Taxation Policy about?

Israel's Taxation Policy michel strawczynski ### 3.1 Introduction This chapter analyzes Israel's taxation policy in the period 2000-2015 based on two criteria: over time and in an international perspective. According to public finance tradition, taxes are generally viewed as a way to finance government spending. Basic fiscal policy models relate to taxes as a tool designed to maintain government's multi-period budget constraint and to prevent the creation of government debt to be financed in the future by the next generation, which is not party to decisions made at the time of preparing the budget. To prevent this undesirable pattern, government decisions regarding tax levels must constantly be examined to ensure that they are consistent with budget expenses. This chapter presents such a review and asks whether the tax cuts in the period from 2004 to 2011 are consistent with the tax smoothing framework proposed by Barro (1979). 1 Barro's model posits that taxes must reflect the permanent level of government spending plus interest payments on the debt. Previous studies 2 based on this model showed that in 2012 there was a discrepancy in the state budget between income and expenditur

Author

Michel Strawczynski

Publisher

Cambridge University Press

Published

2021

Language

EN