According to research published in the Treasury and Tax Museum's September bulletin under the title "Lowering the tax burden over the coming years is essential for improving quality of living," Mr. Michael Sarel, head of the economics and research department at the Finance Ministry, shows that the average tax burden in Israel is 38.5% of Gross Domestic Product, 5.7% higher than in OECD countries.
Mr. Sarel compared in the study the tax burden in Israel with the 30 member-countries of the OECD, the world's most developed nations, an organization in which Israel is not a member.
The findings of the study show that countries with far lower tax rates than in Israel e.g. Australia, Korea, the United States and Ireland - have far higher growth rates than countries with high tax burdens. To verify his argument the writer shows that 15 OECD economies with higher tax burdens grew by an annual average of 2.5% in the years 1995-2005 while the remaining 15 with lower tax rates enjoyed in the same period growth rate of an average 3.6% a year.
In his research, Sarel dismisses claims made recently by local economists, including the governor of the Bank of Israel, David Klein, that Israel's tax burden is comparable to that of the developed nations' average.
