The hi-tech industry's contribution to the gross domestic product has reached NIS 340 billion, accounting for 45% of the growth of the GDP in the last five years.
The contribution of hi-tech to the Israeli economy appears in a report just published by Israel Advanced Technology Industries (IATI), Israel’s umbrella organization for life science, hi-tech, and other advanced technology industries in collaboration with Deloitte Israel, a major accounting firm.
The report, referring to 2021, states that NIS 55 billion of the state's revenues originate from hi-tech taxation, 65% from individual taxation, and 34% from the employees' income tax.
Hi-tech exports amounted to $67 billion and are 54% of Israeli exports. Hi-tech employees comprise 11.9% of the workforce.
The unique characteristics of Israeli hi-tech
The unique characteristics of Israeli hi-tech lead to innovations that span a variety of economic and social fields. Hi-tech is a significant pillar of national resilience and enables the improvement of productivity, along with other growth engines.
Hi-tech is currently at the center of a public uproar regarding the proposed new legislation and steps taken by some of the industry leaders to withdraw funds from Israel. Such a move, if strengthened, could directly harm the budget and anticipated tax revenues in 2023 and even more so in 2024.
A warning on the subject was sent to Finance Minister Bezalel Smotrich by Shira Greenberg, the chief economist at the Finance Ministry at a meeting where the budget was discussed.
The hi-tech sector has thousands of companies at various stages including start-ups, unicorns (companies with a value exceeding one billion dollars), established companies, public and multinational companies.
As part of the preparation of the report, talks were held with CEOs of Israeli and multinational companies, partners in venture capital and investment funds, industry experts in economic media forums, academics and research bodies, senior officials in the Finance Ministry, CEOs of government ministries and the CEO and chair of the Israel Innovation Authority.
A close consultation was held with the chief economist of the Finance Ministry as well as the Aaron Institute, led by Shlomo Doverat and Dr. Sergei Sumkin, who assisted with the research.
Karin Meir Rubinstein, CEO and president of IATI, stated that in order for this sector to be prosperous in the future, moves must be promoted which include preserving the competitive status of Israeli hi-tech, accelerating tech development and professionalizing talents.