A government-appointed committee has recommended that in- vestments in Israel in foreign currency should be “linked” to the dollar to protect them against ongoing devaluation of the Israeli Pound. Without such protection (as is the situation at present), such investments are apt to drop steeply over a relatively brief time span.
For example, the committee explained, a $100,000 investment in January. 1974 would have gotten IL 420,000. By the end of 1974, that IL 420,000 was worth only $60,000. The government’s experts believe this situation accounts in part at least for the current fall-off in foreign investments.
The committee, under auditor Shalom Ronel. who was a member of the five-member Ben-Shahar committee on tax reform, proposed that the real value of the investment dollar be maintained–even after it is translated into Israeli Pounds. It urged that firms be allowed to allocate sums out of the profits–as tax-free expenses–to make good the loss incurred to their foreign investments value through devaluation.
Thus, to take the previous example, if the firm made IL 500,000 profits during 1974, it would be allowed to take IL 280,000–the difference between the old rate and new rate of the dollar investment–before taxes, and put it back into the company’s capital funds. Also the committee recommended that money put aside to pay out future dividends should be tax free (in order to keep up the value of dividends.)
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
