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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

Calculate savings with Golan Telecom, HOT Mobile, Rami Levy, Home Cellular

Use the No Fryers calculator to find out whether Golan Telecom, Home Cellular, HOT Mobile, or Rami Levy Communications are right for you!

In December 2011, Rami Levy was the first new player to debut.  Now, they have been joined by Home Cellular, HOT Mobile, and Golan Telecom.  Each offer straight-forward pricing, with some including “unlimited” plans.

How do you decide which is best for you and if any are a better deal than what you current have?  We’ll take a look at pricing and other factors which you should take into consideration.

Which is the best price?
Get your last couple of bills together, and figure out what your average use of minutes (all types – in network, other cellular, and landline), SMSs, and internet.  You’ll get your results in just three easy steps!

click here to see the rest of the article.

contract workers: justice for some is not justice for all (from the Times of Israel)

A few months ago, the Israeli public finally began discussing the issue on contract workers and what it means to work without any social terms or benefits. Weeks of debates culminated in a four day general strike bringing the issue to the forefront of Israeli media with MKs, businessmen, and labor activists talking about the moral, legal and ethical issues of contract work. But what should have been a platform for change culminated in an agreement for only Histadrut workers, leaving the overwhelming majority of Israel’s struggling working class to suffer.

I’d like to begin by explaining what constitutes a contract worker, because most of the media as well the Israeli government seem to have no idea. A contract worker is any worker, whether part time or full time, who works under a contract that circumvents Israeli labor law. Some of these workers receive wages below minimum wage, many do not receive a pension, and nearly all of them are missing out on at least one of their legal rights, including but not limited to reimbursement of transportation, vacation, sick leave and overtime pay.

There is a reason that we have labor laws. Elected officials enact labor laws on behalf of their constituents as a counterweight to a firm’s desire for strict gains. While it may not be desirable for an individual firm to give vacation days or a sick leave policy, we, the citizens of Israel have the right to enact such laws via our representative government and tell firms that if they want to do business in Israel, these are the rules.

Other labor laws serve not only to help workers in the short run, but also to help stabilize the economy in the long run. For example, the mandatory pension law is designed not only to ensure that all Israelis will be able to retire with dignity, but also to enable the government to ultimately cede the task of supporting the poor, a task that it currently does both begrudgingly and inadequately, to the individual workers. By undermining Israel’s labor laws and allowing employees to pay workers without putting money into their pension funds, Israelis risk not only the continued suffering of the elderly, but also the continued collective economic burden that payouts incur.

Finally, allowing employers to write contracts that circumvent Israeli law leads to lazy governance. For example, most people agree that Israel’s overtime policy, where overtime is paid based on hours worked per day, is excessive and unrealistic, as most jobs require and reciprocate with flexibility. A realistic alternative would be to change the law to mirror the labor laws of other countries, where overtime is paid for excessive hours worked per week or month. But since employers usually sign workers onto a contract for a “global salary,” meaning no overtime whatsoever, the matter never came before the Knesset and they never bothered changing the law. Consequently, instead of having a reasonable overtime policy, most Israelis receive no overtime pay at all.

Much of the media as well as the government claim that by turning contract workers into salaried workers, employers would lose the flexibility they need in order to hire additional labor for seasonal projects, end up giving tenure to more useless workers, and ultimately cost employers too much. In truth, this argument only applies to workers in companies with strong unions, such as the histadrut. For all other Israelis, Israel’s policy for firing a worker is not very strict at all, one day of notice per month with a max of a month’s notice. But if employers insist that following the law is too complicated, then at least some sort of compensation should exist.

To begin, all workers, contract and otherwise, should have a pension paid out of their salary. The pension law isn’t just about the worker; it’s about Isael’s economic stability and in an age of electronic transfers there is no reason why this cannot easily be done. Second, if an employer does not want to pay his employees benefits, then the government should establish a set percentage to be paid as compensation for vacation days and a sick policy. Finally, in order to make sure that all employees follow the laws mentioned above, it should be mandated that all wages should be stated to the potential employee excluding the additional pay for benefits. Just as a regular job quotes its salary figures in gross salary not including benefits, so too salaried workers should have their pay offered in terms of gross pay without benefits. This would also end the current situation where employers pay benefits as a part of a minimum wage, effectively paying their workers below minimum wage. This would also allow potential workers to see the payoff of a job in a consistent, understandable way so that the worker can know if the job is really worthwhile.

Allowing businesses to circumvent labors laws is not only immoral, but make every discussion about labor laws entirely irrelevant. If our Knesset members really believe that minimum wage is just an idea, that the pension law is only an option and that social terms are just a proposal, then they should say so. But if they believe that our labor laws aren’t just a suggestion, but the product of our representative democracy, then the only just thing is to tackle the problem of contract workers and bring order to a labor market plagued with anarchy.

more than just food: items you can and should buy in the shuk

Back in the old country, I would search websites and stores in order to find a bargain, but here things are different.  In a country where Amazon.com means nothing and price tags are only a suggestion, shopping is less about making an informed decision and more about finding your prey and going in for the kill.  As any Israeli knows, the best place for aggressive energetic shopping is the shuk.    But while most people think of the shuk when buying food, there are tons of bargains to be had on other items as well.  For example:

(1) Children’s toys:  I know, I spoil my child, after all, everything I ever bought for my son was imported all the way from China and/or Vietnam.  Lead paint and child labor jokes aside, if you’re looking for something simple like a toy truck or a doll for a young child, there is no reason to spend 5 times as much on an identical item in a toy store.  There may be some toys which are worthwhile to get in the store, but the overwhelming majority of toys for your children (and their friends’ birthdays) can be bought in the shuk.

(2) Linens and clothes:  If you’re looking for a nice suit, I wouldn’t recommend beginning with the shuk; but if you’re looking for socks, undergarments, towels, sheets, t-shirts and shorts, there is no point in spending tons of money in the mall when the shuk offers the same thing for less than half the price.

(3) Electronics and Kitchen utensils:  While fancier electronics should be bought at a place with a suitable warranty, simpler household items such as an iron, kettle, space heater, toaster oven, bug zapper, hair curler and telephone are significantly cheaper in the shuk.  Also, common kitchen utensils such as pots, pans, knives, tenderizers, silicon tins and more are usually available in the shuk for very cheap.

Alternatively, these items can be found at bargain prices in Haredi neighborhoods as well.

What other items do you buy at the shuk?  Is there an alternative place you go to buy some of the items mentioned above for cheaper prices?

the hidden costs of ‘free’ travel insurance policies (from Ha’aretz)

 

Haaretz put out a great article about the buying insurance when going abroad:

The hidden costs of ‘free’ travel insurance policies

Nobody wants to think about ending their vacation in the hospital. That may be why, unlike car, health and life insurance, travel insurance is usually a last-minute affair.

By Rina Rozenberg

Nobody wants to think about ending their vacation in the hospital. That may be why, unlike car, health and life insurance, which most people investigate thoroughly before choosing a provider – consulting with friends and experts, comparing prices, even (shudder) reading the policies – travel insurance is usually a last-minute affair, arranged in between packing your bags and checking the weather forecast at your destination.

Another reason people take travel insurance so casually could be that it’s relatively inexpensive. Somebody offers you a policy with your ticket, or you get it through your credit card. Roughly half the travel insurance policies in Israel are issued by the country’s health maintenance organizations, the kupot holim, according to estimates by industry insiders. Most of the rest are from credit card companies and travel agencies, while actual insurance agents are believed to control only 10% of the market.

The price differences among these sources are negligible. But when it comes to coverage the differences are significant, making it important for travelers to do a little homework before setting out for the airport.

1 Don’t make do with the free coverage provided by your credit card issuer. It may not cover the cost of hospitalization.

The credit card companies do not charge customers for basic travel coverage, and in some cases it is automatic; the customer doesn’t even need to contact the company for it to kick in. The problem is that free policies tend to have more constraints and limitations than policies you pay for. Any serious injury or illness requiring surgery or protracted hospitalization will probably leave the policy holder owing huge sums to the overseas hospital.

That’s because they do not provide for full reimbursement. Free policies issued by the credit card companies set a cap on daily hospitalization and other costs, while policies that cost money generally cover more.

For instance, the Visa Cal credit card company will pay up to $450,000 for hospitalization and other medical costs, but has a $2,000-per-day limit on hospitalization reimbursement. If your medical care costs more per day (or in total ), you are responsible for the balance. Isracard has the same daily cap. Leumi Card’s is lower, at $1,350 a day. Sources in the insurance sector say hospitals in Europe and the United States charge at least $3,000 a day.

The credit card companies do offer policy upgrades – for a fee, of course.

2 Do you have high blood pressure, heart disease or some other preexisting condition, chronic or otherwise? You may need special coverage as part of your travel insurance.

A preexisting medical condition is a “medical condition for which the policy holder received drug treatment, medical care or hospitalization in the six months before the trip,” says Michal Weiner, head of the medical-insurance and personal accident department at AIG Israel. If you travel abroad without coverage for a preexisting medical condition that causes you trouble you will wind up footing the entire cost of care yourself, she warns.

The credit card companies’ basic, free policies do not provide this coverage; you can get it, but you have to pay.

Anyone with a chronic condition such as asthma, slipped disc, heart disease or diabetes – even if the condition is stable – should think about this carefully.

Of the kupot holim, Leumit and Maccabi each offers a one-size-fits-all travel insurance policy that cover preexisting conditions. Clalit and Meuhedet both offer riders, supplemental insurance, at a reasonable per diem rate.

3 Even if you bought an insurance policy through your health care fund, it isn’t the actual insurer, and the actual insurance company won’t be aware of your medical condition. You should advise your insurance agent accordingly.

A few months ago the insurance commissioner at the Finance Ministry, Oded Sarig, issued a draft clarification on medical insurance policies sold by insurance agents, which for the purposes of this article include the health-care funds.

One of the reasons for his paper was that, as Sarig noted, a health-care fund member could mistakenly think that when they purchase travel insurance from their health care provider, the policy is tailored to their medical profile. That’s a big mistake.

“The policy holder figures the health-care provider knows them thoroughly and checked their medical records before offering the policy, but it isn’t so,” says Yaron Baron, sales manager at the DavidShield insurance agency. “The kupat holim is serving as a marketing channel. Clal Insurance or Harel is providing the actual insurance.”

4 Usually a $500,000 policy is adequate. All travel insurance policies have a coverage ceiling of between $500,000 to $1 million; the truth is that the number usually doesn’t matter much.

“In most cases the coverage offered by medical and hospitalization policies is high enough,” says Baron, even though his agency offers PassportCard, with coverage of up to a million dollars. He thinks the number is mainly a marketing gimmick: He says he cannot recall a single case of a traveler needing more than $500,000, the lowest ceiling of any Israel travel insurance policy.

That does not mean that such cases do not exist, of course. Gabi Nakibly, VP marketing and sales at Clal Health Insurance, recalls the case of a customer who collapsed while in the United States and ended up in the hospital for 10 weeks. The bills came to $2 million. “Since we have working relations with hospitals, we managed to get the bill reduced,” Nakibly says, adding, “But that was an extreme case.”

5 Tailor your policy to your trip. If you’re going to spend your vacation mountain-biking on single-track trails skirting deep gorges, white-water rafting or doing some other extreme sport, do mention it to your insurance agent so you can purchase appropriate coverage. If you’re taking along expensive equipment mention that too, and find out how to get it insured as well.

Note that standard baggage insurance also has a cap, usually $1,000 per piece but sometimes as much as $3,000.

If you’re taking expensive items, such as a laptop, gold jewelry or a smartphone, you’ll need extended coverage.

6 Make sure your travel insurance picks up the cost of flying you back to Israel for medical care, if necessary. It will raise your premium for your entire trip by about $15 at Meuhedet, for instance.

7 No matter what insurance policy you buy, there will be co-payments: You will pay part of the bill. How much depends on the policy and the issuer.

And one other thing. Make sure to hold onto all your receipts; without them your insurer won’t reimburse a single cent.

dealing with discrimination

A while ago, I spoke with an olah chadasha in her mid 50’s about her stalling job search.  She expressed her disgust at various firms that did not call her back once they saw how old she was, as she did not include her age on her CV.  When I asked her why she did not simply just tell the potential employer her age in advance by including it on her CV, as it would save her the trip to the discriminatory employer for an interview, she replied that she believes that if she were honest on her CV, no one would call her at all.

Towing the line of discrimination is not easy.  While it would be ideal for all employers to act within the confines of the law, or even act economically rational (workers in their 50’s tend to stay at their jobs longer and take less sick days than their younger counterparts), the sad truth is that the front line in HR is usually filled with discrimination.

Perhaps the answer is simply to avoid anyone that practices any discrimination; after all, no one wants to work for a bigoted boss.  But while this solution may seem right at first glance, it may actually lead to a more frustrating and prolonged job search while not actually avoiding a workplace that practices discrimination.  In many cases, the first person who sees a potential CV, the one who wrongly rejects a CV when he or she sees that the candidate is married and of child bearing age or is in his or her 50’s, is not the person who would be supervising this women were she to have gotten the job.  Certainly this is the case of manpower agencies and companies with large distinct HR departments, but surprisingly, this is the case for many smaller companies as well.  Alternatively, the person who looks at the CV first may not be the type to discriminate, but the potential supervisor may do so once you meet him or her in the second round of interviews.  

So how can a potential candidate minimize the effects of discrimination?  I would not sugest withholding information, since is usually comes back to bite the candidate, nor to simply suck it up and play the victim.  I believe that the solution is to call out the elephant in the room and sell it.  If you’re in you’re 50’s, sell your CV on your experience.  List specific goals that you reached in your lifetime, the type that some 25 year old pisher could only dream of accomplishing.  If you’re a married woman, you should mention that you’re looking for a long term job and use the term stability more than once.  Let the person reading your CV come to the conclusion that losing you for 3 months of maternity leave is worth it in order to have a stable worker for 7 years.  If you’re single and afraid that the company wants someone more stable, mention your flexibility.

Once you get your foot in the door, past the first person reading your CV and finally to the level of the interview when you meet your supervisor, then you can see if he or she indeed discriminates.  At this point, it’s okay to not get hired; you don’t want to work for a bigot anyway.  But at least you know that you’re avoiding a job with a terrible boss and not missing out on a really good job with a great boss because of a bigot in HR.

the best time to buy

Sometimes getting the best deal isn’t just about where you go, but when you go as well.  Once a year, lifehacker.com puts together a list of the best time of the year to buy everything.

I think most of the items in this article apply here as well.

What items do you think have a different best time to buy in Israel?

Import duties and the Israeli Laffer curve

If you’re like most Americans, you tell your relatives who send you packages not to declare that anything is new or has a value over $5.  You do this because one time a relative sent you something and the post office held it hostage until you paid some sort of ridiculously large tax/fine/payment that is calculated using what I can only assume is some sort of mixture between random numbers and witchcraft.  Well, a tiny bit of that is about to change.

As of January 30th, Yuval Steinitz signed a reformation of two import taxes.

– No import taxes on anything ordered by the internet up to ₪ 1,200, although you’ll still have to pay 16% for VAT.

– No taxes (even VAT) on personal packages valued at $75 (up from $50).

The first reform is a great piece of legislation that decreases the cost of alternatives and fosters more competition.  The ₪ 1,200 limit means that the increased competition will only affect lower end items, not luxuries.  I would be interested to know why the government chose such a low number (why not, let’s say ₪ 2,000), but I agree with the idea.

The second price of legislation is also a step in the right direction, but is telling of the government’s ignorance of the issue at hand.  When someone does not declare the full value on the package, he is really only giving up the insurance on the package in the case of loss or destruction.  The value of something is what you pay to get it and I am not willing to pay customs duties in order to receive insurance on the package sent.  This legislation is not going to make any difference to me on any packages valued over $75 because the cost of customs is still too much for me to declare the items.

If the government want to both maximize tax revenue and help its citizens, it should analyze how much people would be willing to pay for insurance on packages and lower the import duty to that level.

Ronald Reagan won the 1980 election by using the Laffer curve to prove that he could raise government revenue by reducing certain taxes.  For those who are not economics nerds, the Laffer curve is a curve that shows the relationship between tax revenue and the various possible rates of taxation.  History shows us that his application was entirely incorrect, but the theory stills holds.  It seems that this is one of those very rare cases when tax cuts along the Laffer curve could be very useful.

Do you instruct your relatives declare the value of items that are sent to Israel?  If not, how low would the tax have to drop in order for you to tell them to declare the true value?

Trajtenberg: More tax breaks for the rich

 

this article is a slightly more in-depth version of the op-ed I wrote that was published in the Jerusalem Post.

This past summer, hundreds of thousands of Israelis gathered to protest for social justice; an end to the widening economic gap plaguing Israel’s poor. The demands were simple: cut down on the government corruption and change the monetary policy that work in favor of big business and begin taxing the rich and redistributing wealth. Unfortunately, after months of protesting, the Israeli government on the advice of the Trajtenberg Committee, only marginally changed the tax system, not only failing to address the economic gap with income redistribution or monetary policy, but worsening it by giving disproportionately large tax cuts to the wealthy.

How exactly in the midst of public outcry for reform did the Netanyahu government manage to fit in more tax cuts for the wealthy? The secret was the expansion of a tax loophole using Bituach Leumi, National Insurance. For absolutely no reason, Bituach Leumi, unlike all other programs that are either controlled by the government or sponsored entirely by it, collects its revenue through a separate income tax.

This tax, along with the bureaucracy of Bituach Leumi, has a long history of working against the less fortunate. In particular, Bituach Leumi ignores tax credits and disenfranchises Israelis working more than one job from doing a full tax alignment by demanding that workers do an additional Bituach Leumi alignment and then systematically drowning the workers in confusion, bureaucratic incompetence and paperwork until processing such an alignment becomes economically prohibitive.

Worst of all, Bituach Leumi’s income tax makes Israel’s tax system regressive for the super wealthy, dropping the marginal tax rate for those who earn above a declared ceiling. Previously, the ceiling for Bituach Leumi income tax was NIS 73,422 per month – up to that amount the tax rate was 12 percent, and any income over that amount was not taxed. The Trajtenberg Committee advised dropping that ceiling to NIS 41,850 – in other words, giving a substantial tax cut to both those earning between NIS 41,850 and NIS 73,422 per month and those earning above NIS 73,422 per month. The government approved the measure, which will go into effect next month.

A comparison of the overall income tax rates from 2011 and 2012 shows that Trajtenberg Committee’s reforms ended up not only giving the super wealthy a greater tax break than their less fortunate counterparts in absolute terms, but also in percentage of total income earned.

Consider the charts below of a simple male worker in 2011 and 2012 with 2.25 points.

Notice in the second chart that once a worker makes a bit more than ₪ 40,000, his tax break rises significantly.  That’s the Bituach Leumi ceiling kicking in.

But what about the points?  Certainly all the new points for young fathers should fix this up, right?  Alright, let’s completely disregard women (after all, the Trajtenberg Committee certainly does…) and deal with the case of a father getting 4 extra points for his children.  The graphs would look a bit better:

In this case the less fortunate father would only get a slightly bigger tax cut than his wealthy counterpart.

And this is completely justified; with the price of daycare through the roof and working mothers unable to use their tax credits, helping fathers is a fantastic idea proposed by the Trajtenberg Committee, although an obviously better solution would be to let married couple share points, like they do in the US.

Regardless, giving a few tax credits to the poor does not justify the tremendous tax cuts given to the rich.

The justification for the Trajtenberg committee’s recommendation to cut taxes for the rich is that high income earners were setting up shadow companies to get around paying Bituach Leumi taxes. It was reasoned that by lowering the Bituach Leumi income tax, high earners would be more likely to pay their taxes.

But exploiting one loophole to avoid another is unacceptable, especially when the government can easily close both. The government seems to fear a mass exodus of the rich, which is absurd. No intelligent CEO will just up and leave his job, family and country because he has to pay his taxes, and if he or she does, Israel has more than enough local talent to compensate. This is exactly the kind of corrupt kowtowing to the super wealthy that sparked last summer’s protests.

Israelis need real economic reform that rolls back some of the supply side policies and takes a fresh look at what is supposed to be a progressive tax system. Bituach Leumi should be incorporated into regular income taxes, laws that enable tax loopholes need to be closed and points should be awarded not only based on the individual worker, but also on his or her respective family unit. One we take these preliminary steps, perhaps the Israeli government will finally be able to legislate kind of reform that was promised this past summer.

ER economics 101

This past week, I was sent my doctor to the ER for treatment of a boil.  I’m doing well, thank you, but it was a huge pain.  Certainly more of a pain than wild animals, but not as much of a pain as hail; overall, I’d give it a 6 out of ten.

When I got to the hospital, the ER was packed; there was not a single seat available in the waiting area.  The only time people seemed to get up was in order to yell at the nurses for their not having seen a doctor yet.  Doctors had to run from room to room in order not to get mobbed by impatient patients.  At one point during the evening a doctor broke down and, after a patient yelled at her that he had been waiting five hours, screamed back at the patient complaining about her terrible working conditions and paltry salary.  More words were exchanged, but I don’t know enough swear words in Russian to translate properly.

By the end of the night, I had waited eight hours to see a doctor.  In retrospect, my waiting was partly my fault.  Medical care is a resource like any other and I should have been looking at this situation using economics, the study of who gets what and why.

Hospitals are overcrowded; doctors are resource in a terrible shortage.  One of the jobs of the nurses is to sift through the patients and prioritize so as to use the resource in the best possible way.  This means that seeing a doctor has more to do with one’s relative priority to others in the ER and less to do with one’s time of arrival.  While many try using intimidation to make themselves look like more of a priority, the better strategy is to wait until a time when there is not much competition.

When a doctor sends gives you a referral to the ER, ask him or her if you need to go ASAP or if it can wait until around 3AM.  If it can, then go home and relax before going to the ER.  Doing this can reduce your waiting time from as much as eight hours to as little as thirty minutes.

Two more things to note: (1) Yelling at the doctors will not help.  They are not the ones under-staffing the hospitals.  If you want to yell at someone, look up the MK’s phone numbers and call them. (2) If possible, try to always to go the hospital with food, a book, an iPod, and, if possible, even a laptop and a couple of movies.  You’re going to wait anyways, so you may as well plan your own entertainment in order to make the time go by quicker.

In an ideal world, our government would get its act together and help provide better medical care for its citizens.  Until that happens, the best thing you can do is to be understanding of those trying to provide you with medical care and to do your part as well.

withdrawing your pension early

As a general rule, withdrawing your pension early is a terrible idea.  In addition to the natural consequences of using money that will be needed later in life, a worker who withdraws early from his pension will pay a hefty fine and lose the ability to invest the withdrawn money tax free.

But there are times when early withdrawal is justified.  For example, I was recently approached by a client who unfortunately will be leaving Israel.  The client paid into a pension fund for a few years, but realizes that since she has around 40 years until retirement, which she plans to spend in her country of origin, she would be better off taking the money with her abroad.

As I mentioned in part one in my series about pensions, there are three parts to a pension fund: (1) the part that you pay in, (2) the part that your employer pays in & (3) the part that your employer pays in that is set aside for severance.

In order to take out the first two parts, you should contact your pension fund and ask to withdraw the funds.  You will be forced to pay a tax of 35% on this money for early withdrawal, and once you agree to this, the money is yours.

The third category, severance, is a bit different.  The severance part (פיצויים) can be taken out whenever you stop working, whether you quit or if you are fired.  If you are fired though, your employer must pay השלמת פיצויים, which means that they must pay the difference of what they already paid in and your final base salary times the amount of years you worked.  But whether you get השלמת פיצויים or not, you can get your money without paying any additional taxes.