עליות חדות באירופה: פרנקפורט ופאריס מתחזקות בכ-3%; הזהב מזנק ב-3.5%
The Recession Squashed Burger King? or, Beefed up McDonalds? or, There are Winners and Losers?
By Hannah Kim
What kind of headline should be given to the Burger King Israel story?
Bino Zadik, one of the owners of Paz, which owns Burger Ranch, is reportedly negotiating with Meshulam Riklis over the purchase of the Burger King franchise in Israel. Burger King Israel ran into trouble, particularly over the last two years, and is now up for sale.
If Burger Ranch Israel acquires Burger King Israel, it will increase its share of the hamburger market against McDonalds Israel and, instead of three companies selling burgers in a bun, there will be two, but they'll be bigger.
So what should the headline be? Is it "The recession wiped out Burger King"? or perhaps "The recession strengthened Burger Ranch and McDonalds"?
Perhaps it should be a double-barreled headline, like the proper, two-dimensional headline about the economic crisis in Israel: "There are losers, and winners too".
The Burger King story is but one of many. Its main creditor, by the way, is Bank Hapoalim. Burger King owes it some NIS 10 million.
What's Hapoalim's story? The 900 people it fired have lost, but the bank is prospering and is in the middle of an acquisition campaign.
Lately, it's been reported, the bank's management is examining the purchase of the Israeli branch of Poland's largest bank, Pekao, for NIS 50-70 million, because of the Israeli branch's losses.
For Hapoalim, that's a small bank deal that joins a larger acquisition campaign: Hapoalim already bought the public shares in its subsidiary Mishkan, purchased the Maritime Bank, and conducted negotiations for acquiring those shares of the Continental Bank that it doesn't already own (37%). The bank's directors have also announced they are interested in buying Discount New York or possibly all of Discount.
So what's the headline on this story? Is it "Small banks collapsing in Israel," or perhaps "One bank gets stronger"? The fact that Hapoalim's acquisition of the Polish bank was made possible by the Bank of Israel's new policy, under which large banks can acquire small banks even if the price is that in a few years' time there will only be large and medium-sized banks in Israel, is the real headline of the recession.
Therefore, when considering the state of the Israeli economy, one must look not only at the poverty and the closing of 60,000 small businesses in the last year.
One must ask - and show - who are those people and companies that are moving their assets overseas, what does the new distribution of wealth in Israel look like, and why don't those same people who cluck their tongues and talk about cutbacks in the budget - for the sake of the economy, of course - talk about the flight of capital and the economy's strides toward over-centralization.
Why isn't there anyone to talk about how, under the cover of the economic crisis, a new distribution of wealth is taking place?
The recession not only harmed wage earners, but also the owners of small and medium-sized businesses. There's no doubt the cuts planned by the treasury in the 2003 budget will worsen the damage.
The reason for the cutbacks, say the heads of the treasury, was the drop in tax revenues. But what contributed to that sharp drop? Was it the cutbacks in the National Insurance Institute payments to hundreds of thousands of people who don't even earn minimum wage?
Of course not. One of the reasons for the drop in tax revenues was precisely the much-touted "economic blow to the rich" - canceling the ceiling on NII and health insurance payments for those who earn more than NIS 35,000 a month, gross. Since companies pay only 36% company tax, since July 1, 2002, some 30,000 new companies were registered, with the sole purpose of legally evading the extra tax payment.
Attorney Avi Alter, who was on the Rabinovitch tax reform commission, told Yedioth Ahronoth this week that the lost revenues to the state from canceling the ceilings on NII and health insurance could reach NIS 3 billion a year. "Most of the wealthy have been paying less taxes since July 1," he said.
When the ruckus about the American war in Iraq dies down and the planned cutbacks in education and health go into effect, it will turn out that the Israeli economy is more centralized than ever and that a large number of people who own companies are paying less taxes. These are two stories about two apparently different economies, both in one country deep in recession, in which harm to one strengthens the other.