The government will submit a single-year budget for 2013, temporarily forgoing the two-year budget format because of the upcoming elections, Finance Minister Yuval Steinitz announced Sunday.
Speaking at the weekly cabinet meeting, Steinitz said he recommends that the government legislate to ensure that all future budgets, beginning in 2014-15, are produced biennially except for in election years. The next election must take place by October 2013 at the latest.
Steinitz’s announcement signaled an about-face from his statement at the first meeting of the new unity government last month that he would recommend a two-year budget in 2013. He said at the time he had reached his decision following intense consultation with professional and legal experts.
Steinitz and Treasury budget director Gal Hershkovitz were expected to present the contents of the 2013 budget to Prime Minister Binyamin Netanyahu late Sunday.
Media reports have suggested the budget will include large-scale cuts to government ministries and the public sector, as well as increases to value-added tax (from 16 percent up to 17%) and corporate tax (25% to 26%). However, Treasury officials have denied they are planning to raise the VAT.
The government introduced its unconventional two-year budget format for the years 2009-10 and repeated the cycle in 2011-12.
Steinitz has frequently credited the two-year budget with helping the economy maintain stability and avoid the slowdowns suffered by other developed economies over the past four years.
MK Avishay Braverman (Labor) welcomed Steinitz’s announcement of a single-year budget but said the finance minister was a “zig-zagger,” “hesitation-prone” and only made the decision under public pressure.
“For the sake of the Israeli public and economy,” he said, “I hope the finance minister also reverses his unfortunate stance on the budget’s contents, [such as] cuts to spending, taxation on fruits and vegetables and the VAT hike.”
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