Is the world financial crisis leading Israelis abroad to come back home?
The Ministry of Immigrant Absorption reports a fifty percent increase in the number of Israelis living abroad applying for state help to return to the country as a result of the world financial crisis. Over the past two months, since the collapse of financial institutions on Wall Street in August, the ministry reports some 2,050 Israelis have returned home, and another 3,000 have registered with the ministry for aliya next year, an increase of 50% from the same period last year, where 1,370 Israelis returned.
The ministry expects 15,000 Israelis, who have already started aliya proceedings, to return in 2009. There are currently an estimated 700,000 Israelis living abroad, with 60% of them in North America.
The huge increase is partly a result of the ministry’s campaign for returning Israelis during the country’s 60th anniversary, and partly because of the financial meltdown in America and much of Europe. Recent reforms in tax rules for returning Israelis play a big part in the ministry’s campaign.
The two months in question, August to mid-October of this year, represents an all-time high for the numbers of Israelis coming home and others opening proceedings for an expected return. 7,000 Israelis have returned home since the beginning of 2008, and 15,000 more have “informed the ministry of their intention to return,” the ministry reports. The average annual rate of return over the past several years has been at approximately 4,050, an average already surpassed this year, with two more months left to go.
Early next month, the Ministry of Immigrant Absorption, the Tax Authority and the Jewish Agency for Israel will embark on a joint campaign to make Israelis living abroad aware of the tax benefits they are entitled to under the campaign to bring them back to Israel, especially a 10 year exemption on reporting and paying tax on all passive and earned income from outside Israel. This includes pensions, rents, royalties, dividends, capital gains, interest payments, and profits from overseas businesses. These benefits would also extend to qualifying trusts. Returning Israeli citizens who lived abroad for over 5 years, and return during 2007, 2008 & 2009 will be considered new immigrants for the purposes of this law.
The joint campaign will highlight Israel’s current economic stability, especially in the face of the world economic crisis. However, while Israel has not been greatly affected by the world economic crisis yet, experts and analysts predict mounting job losses and an economic slowdown.
Elihu Ben-Onn, host of the IBA’s popular ‘The Israeli Connection – Conversations with Israelis Abroad’ weekly world wide phone-in show, says that while he has noticed increased talk about returning home due to the financial crisis, he has not picked up on a mass exodus of Israelis back to their homeland. “Over the past several weeks many Israelis on the show have spoken about the financial crisis, but I haven’t heard anyone say ‘I’m closing my shop, packing up my things and coming home because the situation is so bad’. We ask them how the feel about the crisis and many say that they are considering returning, but there is definitely not noticeable decision by veteran yordim to come home,” Ben-Onn says, adding that some Israelis who were overseas on long-term business projects and are now finding it hard to get credit for their projects may be more interested in coming home than long-term yordim. What Ben-Onn has noticed is Israelis saying that due to the rising costs of living and travel, more Israelis living abroad are finding it harder to afford visiting family here. “If in the past the whole family would come to Israel for a visit or vacation, now in many cases it is not the whole family, but just a few members, and for shorter periods,” he says.
