Tel Aviv exchange’s new CEO calls for reduction in capital gains tax
The new head of Israel’s stock exchange called on the government to lower the country’s capital gains tax from the present 25%, to encourage more investment from the public.
“We think 25% for private investors is too high,” Itai BenZeev, chief executive of the Tel Aviv Stock Exchange, told Reuters after a news conference on Tuesday.
“If it goes from 25 to 10%, immediately you will see a shift of people coming to the equity market.”
The Finance Ministry said it was studying the issue.
The TASE has seen trading volumes and company listings drop in recent years. Ben-Zeev partly blamed the capital gains tax, which he said encouraged the public to invest in other assets such as real estate, where landlords pay minimal tax on rental income. Israeli home prices have more than doubled since 2007.
Securities regulator Shmuel Hauser last year blamed some of the exchange’s woes on an anti-business environment in Israel and hefty regulations the agency is in the process of easing.
“We have had more IPOs in the first quarter than what we had in the entire previous year and we have a pipeline for more IPOs and new debt offerings,” Ben-Zeev said.
So far in 2017, five initial public offerings have been made, totaling some $400 million, versus three in all of 2016. Daily trading volume has risen to 1.6 billion shekels on average, from 1.3b. daily last year.
“We definitely feel the sentiment has changed,” said BenZeev. “We hear it from underwriters and companies.”
In his first news conference since taking office at the start of 2017, Ben-Zeev outlined a plan to further boost the market. Among them was a hope for the privatization of as many as 15 state-owned companies through the stock exchange with a combined market value of about 15b. shekels.
They include two of Israel’s ports, the post office, water company, three defense contractors and electricity utility Israel Electric.
Ben-Zeev also wants to bring about 90 Israeli companies that are traded abroad to list in Tel Aviv as well as hundreds of small and medium-size firms and high-tech growth companies. He is also seeking to boost liquidity by enabling banks to become market makers in stocks, a move that requires approval from the supervisor of banks. (Reuters)