Monday, March 27, 2017

Fight for Your Right (To Pay Tax)

Dafna Shemer
Jerusalem Institute for Policy Research   en.jerusaleminstitute.org.il

Jerusalem’s Arnona (municipal tax) is particularly high, the highest in Israel. In 2014 Jerusalem’s total due Arnona was 1,173,000,00 NIS (New Israeli Shekels) for 212,000 housing units. Arnona discounts amounted to 26% of the total, with 40% of the discounts going to residents from Jerusalem neighborhoods of low socio-economic status (a socio-economic status of 2-5, with 20 being the highest status, according to the 2008 census).
An examination of Jerusalem’s lower socio-economic neighborhoods reveals an interesting picture regarding the exercise of rights on the part of East Jerusalem versus West Jerusalem residents. These neighborhoods are geographically and socially distinguishable as areas populated by the ultra-orthodox (haredi) in West Jerusalem and by Palestinians in East Jerusalem.
Most (72%) of the properties in West Jerusalem that belong to residents of lower socio-economic standing have a ranking of 4 or 5, whereas in East Jerusalem only 49% of the properties belong to residents with a ranking of 4 or 5.
Building on the assumption that people with the same socio-economic status would receive the same discount in Arnona, given their income, we examined lower socio-economic neighborhoods in West Jerusalem and in East Jerusalem. We examined how many discounts were granted on the basis of income, as a proportion of the total number of apartments in the neighborhood. Evidently, the percentage of Arnona discounts based on income, as a proportion of the total number of apartments, is higher in West Jerusalem (39%) than in East Jerusalem (26%). For the sake of comparison, we note that in neighborhoods of higher socio-economic standing (15-19), 6% of the apartments receive a discount on the basis of income.
Both East Jerusalem and West Jerusalem neighborhoods show a decrease in the percentage of discounts granted on the basis of income as the socio-economic ranking of the neighborhood rises. East Jerusalem neighborhoods with a socio-economic status of 2 received discounts for 27% of the apartments therein, whereas West Jerusalem neighborhoods with a ranking of 2 received discounts for 42% of the apartments therein. East Jerusalem neighborhoods with a socio-economic status of 5 received discounts for 15% of the apartments therein, while for West Jerusalem this figure was 35%.
When we examine the total Arnona collected, in relation to the total due without discount, amidst residents of lower socio-economic standing, we find that collection rates in East Jerusalem (72%) are lower than in West Jerusalem (85%). Here too, as the socio-economic status increases from 2 to 5, Arnona collection rates increase. For higher socio-economic rankings (15-19), collection rates are higher too – at 96%.
In sum, one might conclude that residents of West Jerusalem are more effectively exercising their rights vis-à-vis Arnona than East Jerusalem residents. And perhaps as a consequence, Arnona collection in West Jerusalem is more effective and efficient than it is in East Jerusalem.


Wednesday, March 15, 2017

Employment Integration and the Jerusalem Intifada

Marik Shtern
Jerusalem Institute for Policy Research   en.jerusaleminstitute.org.il

Since the end of the second intifada and construction of the separation fence, the economic and employment integration of Jerusalem’s Palestinian residents within West Jerusalem has been on the increase. The demographic growth of the city’s Palestinian population, on the one hand, and the economic crisis in East Jerusalem caused by the separation fence and consequent disconnection from the Palestinian economy, on the other, resulted in the integration of this population group into the Israeli labor market on a scale and scope unprecedented since 1967. Newly available data of the National Insurance Institute (social security), as processed by the Jerusalem Institute for Policy Research in relation to the composition and characteristics of persons employed in Jerusalem during 2006-2015, reveal that in 2015 the increase in number of Arab workers was halted, for the first time ever, and even reversed slightly.
As of 2015 employed residents of Jerusalem numbered 278,403. The relative proportion of employed Arabs within the city’s labor force grew steadily between 2006 and 2015, from 22% in 2006 to 28% in 2015. During this period the number of employed Arabs registered with the East Jerusalem branch of the National Insurance Institute rose from 45,730 to 74,204 – an increase of 62%. In 2015 this increase was halted and the total even declined by 110 employees.
Current data on recipients of unemployment benefits and income support can, to a certain extent, help explain why the city’s Arab labor force stopped increasing. According to National Insurance Institute data, the number of recipients of unemployment benefits among East Jerusalem Arabs rose steadily from 352 in 2008 to 1,501 in 2015 – an increase of 426% in seven years. The main increase took place during 2013-2015. In addition, the number of income support recipients from East Jerusalem also jumped, nearly doubling between 2011 and 2015, from 3,853 to 5,793 – about 700 more than the number of Jewish income support recipients in the city for the same year. These figures presumably reflect the large number of Arab workers who were excluded from the employment cycle in recent years. Their exclusion can probably be explained in terms of the economic crisis that befell Jerusalem’s private employment sector following the events of the Jerusalem intifada, as well as instances of dismissal or refusal to employ Arab workers in West Jerusalem during this period. At the same time, the increase in recipients of unemployment benefits and income support could also indicate an increase in awareness and capability within this population group when it comes to implementing their social rights. In other words, their economic integration and what has recently been termed their “Israelization” actually enable Palestinian residents of East Jerusalem to claim their social rights under conditions of economic crisis or dismissal from work, which in turn result from an intensification of the national conflict in the city.


Translation: Merav Datan

Monday, February 20, 2017

The True Stats of Doing Business

Alon Kupererd
Jerusalem Institute for Policy Research,   en.jerusaleminstitute.org.il

If one examines the available data on openings and closings of businesses, while ignoring the net change in the number of businesses, one might conclude that the business sector is constantly in flux – given the large numbers of openings and closings.

Indeed, the data on business registrations, as provided by the Central Bureau of Statistics and presented in the 2017 Statistical Yearbook on Jerusalem (forthcoming), indicate that in all economic sectors, with the sole exception of the manufacturing, mining, and quarrying sector, there has been a gradual increase in the number of active businesses during 2015. For example, during this year Jerusalem saw the opening of 242 new businesses in the real estate sector while 137 were shut down, indicating a positive net change of 105 businesses for this sector. This is smaller than the figure for Tel Aviv-Yafo, which saw an increase of 212 businesses in the real estate sector during the same year. In Haifa there were 146 business openings and 88 closings, yielding a net change of 58 new businesses – well below the figures for Jerusalem or Tel Aviv.

The important question, however, is whether this net change is a true reflection of activity trends in the business sector. Not necessarily, as it turns out, given that the absolute numbers do not accurately represent the proportionate change in the number of businesses in a city, and given that the economy of a city varies with the size of the city. As such, any comparison across cities requires an index of measurement that neutralizes variance in the number of active businesses per city. So let us compare business activity across cities using ratios per 1,000 businesses.

When we examine the above data using this method, we find that Jerusalem saw an increase of 44 businesses for every 1,000 active businesses, while Tel Aviv had an increase of 33 businesses per 1,000. In Haifa the proportion was 40 businesses per 1,000. Thus we see that even though Tel Aviv saw the greatest increase in this sector in absolute numbers, its rate of growth was the lowest among the three major cities, including Haifa, which had the lowest figure in absolute numbers.

In addition to the rate of growth, we can also examine stability. To see which sectors maintained relative stability and which underwent high turnover, let us calculate the rate of change among businesses (sum of business openings and closings) per 1,000 active businesses.

When we compare across sectors, we find that among the three major cities and Israel as a whole, the sector with the highest rate of business openings and closings was that of accommodation services and restaurants (287 openings and closings per 1,000 active businesses in Jerusalem, 260 in Tel Aviv, and 315 in Haifa).

The sectors with the next highest rates of openings and closings were the hi-tech industry (257 in Tel Aviv, 229 in Israel, 220 in Jerusalem, and 212 in Haifa) and information and communications (232 in Tel Aviv, 228 in Israel, 226 in Jerusalem, and 225 in Haifa).

It should be noted that those sectors that showed high rates of business openings and closings also had relatively high rates of growth in terms of the number of businesses per 1,000 active businesses: in Jerusalem the hi-tech industry ranked second and the information and communications sector ranked fourth; in Tel Aviv the hi-tech industry ranked first and the information and communications sector ranked second.



Translation: Merav Datan