The Knesset plenum on Monday passed a bill that sets the upper limit for the gross salary of a top executive in a financial institution at 35 times the gross income of the lowest-paid worker in the institution, or 44 times the lowest-paid net. With minimum wage currently at NIS 4,650 per month gross, the new law effectively limits executive pay to NIS 1.95 million per year before taxes. Any pay above that figure is no longer counted as a tax-deductible corporate expense, and will thus be double-taxed through both corporate and employee income taxes.

The previous bar for tax-deductible executive pay was set at NIS 3.5 million per year.

The plenum approved the bill in its second and third readings by a vote of 56-0.

Knesset passes law limiting the pay of executives in the financial sector

MK Moshe Gafni (Archive photo: Itzik Harari)

Finance Committee Moshe Gafni (United Torah Judaism) said the measure deals with the ”moral problem of the excessive salaries” of those who are in charge of public funds. ”This the first time that we, the members of the Knesset, have made an important social statement, that the excessive pay of the heads of the financial companies is absurd and immoral,” he said.

MK Zehava Galon (Meretz) said: ”This is an historic day. A day after the High Court of Justice spoke out against the tycoons` monopoly over the natural resources – the public`s gas – the Knesset forces [executives] in the financial establishment to stop being pigs.”

MK Shelly Yachimovich (Zionist Camp) said ”This is perhaps the most moral law the Knesset has ever passed.”

Fellow Zionist Camp member MK Yoel Hasson said the law shows that the government and the Knesset ”know when to say `enough is enough,`” adding ”We will no longer tolerate this culture of demeaning the public.”