PM's reversal on produce VAT leads MKs to step up pressure for budget changes

MKs from coalition parties work to chip away at budget, economic arrangements bill in effort to make them more palatable for constituents.

July 7, 2009 23:12
2 minute read.
PM's reversal on produce VAT leads MKs to step up pressure for budget changes

Binyamin Netanyahu 248.88. (photo credit: AP)

The removal of the VAT-on-produce clause from the draft budget made itself felt in the Knesset's committees Tuesday, as MKs began to work to ensure that clauses that they found unacceptable would be also removed from the bill. In the Economic Affairs Committee, the Labor, Welfare and Health Committee and the Finance Committee, MKs from coalition parties worked to chip away at the budget and the economic arrangements bill in an effort to make them more palatable for their constituents. Among the early casualties were the expansion of the so-called "Wisconsin Plan" to include more than the four cities in which it is currently being operated, and the uniform health tax that opponents complained would raise health-care costs for Israel's working poor. The Wisconsin Plan, which had been a hallmark of Prime Minister Binyamin Netanyahu's economic policy during his tenure as finance minister, was nixed by none other than Netanyahu loyalist Labor, Welfare and Health Committee Chairman Haim Katz, who complained that "the reform requires in-depth work, which is not possible within the crowded timetable set for hearings on the economic arrangements bill." The health tax proposal, which would have set the minimum monthly payment at NIS 90 was foiled by Finance Committee Chairman Moshe Gafni (UTJ), who forced the Treasury to remove that clause from the bill, which is being prepared for its second and third readings on the Knesset floor. Gafni also removed the clauses that made payment of child allowances contingent upon parents enrolling their children in school. "These benefits are given to the population universally, and we cannot begin to put conditions on them," explained Gafni ally in the effort, MK Shelly Yacimovich (Labor). "Child subsidies cannot become a tool for punishment." Also chopped was the proposal to collect VAT on hotel stays by overseas tourists - a measure that had been vehemently opposed by key coalition partner Israel Beiteinu, which holds the Tourism Ministry - and a clause that would remove a tax credit point from academics who hold a recognized B.A. degree. MKs such as Yacimovich found themselves running from hearing to hearing and vote to vote Tuesday, as the Knesset's committees rushed to prepare the budget for the plenum vote next week. But even with marathon meetings, it was hard to imagine how all of the troublesome clauses would be ironed out within the coming week. MK Carmel Shama (Likud), chairman of Economic Affairs Committee subcommittee tasked with examining the Israel Lands Authority reform plan that is also included in the economic arrangements law, hinted during his committee meeting that that reform would itself be reformed before being presented on the floor. Shama reflected the mood of many MKs even within the coalition when he referred to allegations that Prime Minister Binyamin Netanyahu was prone to changing his political stance on budget clauses, by jokingly remarking in committee "okay - now we'll do a bit of a zigzag. Perhaps not as big a zigzag as the one last night, but a zigzag nevertheless, only to the next topic."

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