Knesset approves NIS 906.8 billion budget

Kahlon: We cut taxes but added funds to social ministries

By LAHAV HARKOV, MICHAEL ZEFF
Updated: DECEMBER 22, 2016 09:49
Moshe Kahlon (photo credit: MARC ISRAEL SELLEM)
Moshe Kahlon
(photo credit: MARC ISRAEL SELLEM)
The Knesset approved the 2017-2018 state budget on Wednesday evening, as well as the accompanying Economic Arrangements Bill, after four hours of debate.
The budget totals NIS 906.8 billion for the two years, with a 2.9% deficit target.
Finance Minister Moshe Kahlon said many doubted that the coalition could pass a second (two-year) budget, and that he was proud to prove them wrong and that the economy is “strong, stable and growing.”
“I have had the great privilege to work in the last year and a half for Israeli society and citizens and for the good of the market and the economy,” he said.
Kahlon added that his budget cut taxes but still adds to “social” ministries, such as Labor and Social Services, Health and Education.
“The budget we are authorizing today is social and colorblind.
It helps all populations,” he said.
Opposition leader Isaac Herzog (Zionist Union) took the opposite view.
“This budget is boring,” he lamented. “It contains no good news for the people of Israel and totally misses the mark.”
“This is a hopeless budget with no solutions for Israelis’ daily economic problems. Not for the housing crisis from which hundreds of thousands of young couples suffer, not for the farmers that the government harms non-stop, not for small and medium businesses that aren’t able to survive and which close one after the other, not for single mothers... not for Holocaust survivors... not for local authorities... not for anyone, except for those who are close to Netanyahu and his partners,” Herzog said.
During the votes, Prime Minister Benjamin Netanyahu left the plenum to engage in a live video chat on Facebook, sparking a walkout by outraged Zionist Union MKs.
Coalition chairman David Bitan (Likud) distributed candy to keep the lawmakers focused and awake, but when he offered one to Knesset Speaker Yuli Edelstein, Bitan was chided for breaking the rule against bringing food and drink into the plenum.
MK Shelly Yacimovich (Zionist Union) pointed out on Twitter that Netanyahu broke the rule with no repercussions.
The Economic Arrangements Bill, legislation passed in tandem with the budget that outlines the basic economic policies that are meant to accompany it, seeks to encourage hi-tech and industry in the country and in the periphery specifically. The Knesset Finance Committee approved amendments to the Capital Investment Encouragement Law, which would reduce corporate tax for hi-tech companies and traditional industry companies from 16% to 12% for companies located in the central region and from 9% to 7.5% for companies located in the periphery.
The Economic Arrangements Bill also tackles the contested issue of Kahlon’s multiple apartment tax article. Kahlon’s plan, also known as the “third apartment tax,” is to impose an annual tax on owners of three apartments and more, amounting to 1% of the third and any additional apartment’s value. The tax would be capped at NIS 18,000 a year, and an array of amendments was introduced to the article prior to its approval by the Finance Committee last Friday.
There might be some good news for immigrants via the Economic Arrangements Bill, due to the introduction of an amendment on Wednesday to the Aliyah-Absorbing Cities Law. The original text of the legislation gave grants to municipalities with an olim population a 10% or more. This gave an advantage to cities such as Ra’anana, where the olim population surpassed 10% but who are already socioeconomically strong. The amendment would bestow grants on any municipality that has more than 500 olim who are socioeconomically disadvantaged.
Additionally, as a trade-off for Yisrael Beytenu’s coalition agreement demand to grant pensions to retired olim whose country of origin does not pay their pension, the Knesset Welfare Committee approved an increase of up to NIS 750 a month in old-age allowances, at an annual cost to the state of NIS 1.4 billion.
The final budget bill includes two controversial flat cuts – meaning budget cuts across all ministries – amounting to NIS 3.3b per year.
One flat cut of NIS 1.2b was submitted and approved by the cabinet on Sunday, intended to finance “the application of the existing coalition agreement” with the haredi (ultra-Orthodox) parties (Shas and United Torah Judaism) and Bayit Yehudi. Additionally, the flat cut would finance the evacuation and post-evacuation arrangement for the Amona outpost in the Binyamin region of Samaria, and the cost of keeping the Israeli Broadcasting Authority on air longer than originally planned.
The second flat cut of NIS 2.1b. – which passed in the Finance Committee on Sunday – is intended to finance part of Kahlon’s previously approved Savings Plan for Every Child.