Bank of Israel Gov. Stanley Fischer on Thursday labeled Finance Minister Yair
Lapid’s budget proposal “brave,” saying that despite its complex reorganization
of both revenue and expenditure, it sets a responsible fiscal path
“As I said when I expressed support for putting the deficit for
2014 at 3 percent, the decision requires painful steps. Naturally, the broad
public feels the impact that every household in Israel will experience as the
result of the implementation of the program. However, it’s important to
remember that we cannot meet a budget challenge while only focusing on this
sector or that population,” Fischer said.
“As the finance minister said,
the entire public will have to bear the burden. At the end of the day, restoring
fiscal stability will strengthen the economy’s resilience to shocks, help the
economy realize its growth potential, and support the public’s welfare as a
The governor also said that if the government decided to increase
the defense budget, it would have to find a way to offset the cost in order to
maintain the overall budgetary framework. Lapid and Prime Minister Binyamin
Netanyahu are scheduled to hash out plans for the defense budget on Sunday,
ahead of a Monday cabinet vote on the overall proposal.
organizers of the 2011 tent protests are planning to take to the streets again
on Saturday evening to protest the cuts and tax hikes in Lapid’s budget
Several hundred people protested outside Lapid’s home in the
Ramat Aviv neighborhood of north Tel Aviv on Thursday night.
(“Transit Camp”) and Lo Nehmadim (“Not Nice”) groups called, on social media,
for a large demonstration at Habimah Square in central Tel Aviv on Saturday
Some 10,000 people said they would attend the protest in Tel Aviv,
on a Facebook event page created by the organizers.
“We are students,
young families, people who have a hard time to pay the bills. We don't see
anything new in this budget, or any reason for hope,” the organizers wrote on
“I don't think the goal is reach an X amount of people, but
rather to create a joint stance against moves that are going to hurt a lot of
people,” Daphni Leef, one of the 2011 summer protest organizers, told Channel
Former tent protest leader MK Stav Shaffir (Labor) wrote on her
Facebook page, “Lapid’s definition of ‘hope’ is very odd. You wouldn’t want to
include it in the lyrics of the national anthem, especially not the part about
raising VAT by 1% to 18%, and definitely not the clause which describes how a
1.5% hike on ‘everybody’s’ income tax contributes to Israel’s
Earlier on Thursday, Lapid garnered the support of President
Shimon Peres, whom he presented with a copy of the proposed state budget in
accordance with the law and tradition.
“We’ve entered a deep pit and
we’ve made a steadfast decision not to ignore the situation, but to do the right
and difficult thing in order get out of the pit in the fastest possible time,”
Lapid told Peres.
“You could have picked an easier job,” remarked Peres,
who commended Lapid for not having flinched from such a difficult
Peres recalled that when he was prime minister in 1984, he had
to cope with an inflation rate of 450%.
“It wasn’t easy. I caused a lot
of disruption and discontent to many sectors of the population – not out of
pleasure, but out of need,” he said. “I was subjected to a lot of
criticism. It could not be accomplished without difficulty, but within
nine months inflation dropped from 450% to 16%.”
After that, said Peres,
his critics became his supporters.
Inasmuch as he has to take a tough
stance, said Lapid, he will create a safety net for the weakest sectors of the
Mindful of how children and the poor will be affected by
cutbacks in allotments and increases in taxation, the president said that no one
will complain without reason, but when there’s a crisis, everyone has to be
“If you do the right thing, the results will come
quickly. You’re not imposing cutbacks forever,” Peres
Despite the encouraging words, plenty of critics
The heads of the hi-tech industry called an emergency meeting
for Sunday over cuts to the budget of the Chief Scientist’s Office in the
Economy and Trade Ministry, which will reduce the budget from NIS 1.57 billion
to about NIS 1b. Even Peres, who places a lot of faith in what science can do
for the economy, alluded to the reduction, saying that there was correlation
between cutbacks and scientific innovation.
Fresh off announcing a deal
with Lapid, Histadrut labor federation chairman Ofer Eini called the budget cuts
“draconian,” and said the union would gladly participate if new social protests
The Finance Ministry officials, he complained in an Army Radio
interview, “have a thesis that says you have to cut into the flesh, and they
operate as though they have all the wisdom.”
Corporate tax could have
been raised 3 percentage points instead of 1, Eini said, and the 1.5 percentage
point income tax hike could have been spread out progressively.
isn’t the government I hoped for, but there is a democracy in Israel and this is
what we got,” he said.
Though he prevented greater cuts to public
workers, Eini said, “I do not see the agreement as a victory.” For a political
novice, Lapid was a surprisingly able negotiator, he said.
Finance Committee chairman Nissan Slomiansky late on Wednesday night praised
Lapid for striking a deal with Eini, but criticized him for placing too much of
the burden on the middle classes.
“In my opinion, we shouldn’t overlook
the very deep pockets of the big companies,” Slomiansky said, promising to take
action in the committee to distribute the burden more evenly.
Economy and Trade Minister Naftali Bennett announced a plan to ease the
regulatory burden on small- and medium-sized businesses by giving them a 90%
discount at the Standards Institute.
Businesses are required to buy
packages outlining all the standards their particular business must meet, a cost
Bennett said was overly burdensome.
“We promised to open the clogs in the
Israeli economy, and this is an important step in that direction,” Bennett
The institute will also cut red tape and provide clearer guidance
and support for entrepreneurs, and create an online system to increase
Globes and Jerusalem Post staff contributed to this report.