Netanyahu gives full backing to Lapid on budget

May 8, 2013 08:34

Prime Minister says he will not interfere with Finance Minister Yair Lapid's new budget plans, except for the security budget.

1 minute read.

Prime Minister Binyamin Netanyahu gives a speech during a gala dinner in Shanghai , May 6

Netanyahu in China 370. (photo credit: REUTERS)

BEIJING - Prime Minister Binyamin Netanyahu commented Wednesday on the new budget proposal presented by Finance Minister Yair Lapid on Tuesday, saying he gives his full backing to Lapid.

Netanyahu said he will not interfere in the process, except for matters dealing with the security budget.

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The prime minister landed in Beijing on Wednesday morning in what is considered the "meat" of his five-day visit, including meetings with the new Chinese President Xi Jinping on Thursday and Chinese Prime Minister Li Keqiang on Wednesday afternoon.

The budget proposal that Finance Minister Yair Lapid submitted to the government Monday night comprises an income tax increase of 1.5 percent starting in 2014 and boosts 2013 spending by 7% in real terms, the largest budget increase of any OECD nation.

The cabinet will have a chance to vote on the draft budget at its meeting next Monday, but does not need to pass it until early June. The Knesset must then approve it by August – otherwise new elections will be called.

Lapid faces formidable opposition from within the coalition, as several ministers are threatening to vote against his new budget.

“I will vote against the budget the way it looks now,” Environmental Protection Minister Amir Peretz said. “I oppose cuts in child benefits, increases in VAT and cuts in funding of daycare centers. This budget hurts working mothers.”

He plans to propose differential VAT, meaning a higher rate for luxury items and lower for necessities – in the next ministerial meeting on the budget – saying it has the potential to help weaker populations.

In a Knesset Economics Committee meeting, Tourism Minister Uzi Landau spoke out against the planned cancellation of the exemption of tourist industries from VAT.

“Tourism employs 200,000 people,” he said. “Over 80 percent of tourism is incoming tourism, meaning that this is an export industry.

Niv Elis and Lahav Harkov contributed to this report.

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