Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon agreed March 13 to devise a joint plan for cutting taxes. Earlier that same day, Intel announced its purchase of Mobileye, the Israeli leader in self-driving technology. Kahlon insisted a day later that the tax cutting has nothing to do with the Mobileye mega-deal and the expected tax windfall from it of at least 4 billion shekels ($1.09 billion) that will land in the state's coffers.

Indeed, the goverment's policy of pursuing tax cuts is hardly new. The proposed 2011-12 budget said the government would “continue to implement its multiyear tax plan, extended in 2009 until 2016.” In September 2015, the government also decided to reduce the Value Added Tax (VAT) from 18% to 17% and corporate taxes from 26.5% to 25%.

The tax cut policy is explained by the desire to stimulate economic growth. In accordance with neoliberal economic theory, in which Netanyahu avidly believes, easing the tax burden encourages foreigners to invest in Israel. It is also designed to prevent Israeli firms, such as Mobileye, from fleeing to tax havens and countries with lower tax rates. Mobileye’s success, however, as well as that of other high-tech Israeli firms that have paid billions in taxes and will continue to do so, proves that the tax burden in Israel is not so onerous.

Not only was Mobileye founded and developed in the Holy City of Jerusalem, but Intel decided that the company would continue to operate there and would even recruit additional local staff. As Kahlon said, the Mobileye deal and Intel's decision to keep the company in Israel surely have nothing to do with the government’s expected tax cut decision.