PM set to postpone cabinet budget talks

Talks said to be postponed until after High Holidays in October, indicating disapproval with current proposal.

By NADAV SHEMER
August 14, 2012 20:08
2 minute read.
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PM Netanyahu, Finance Minister Steinitz 370. (photo credit: Sebastian Scheiner/Reuters)

 
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Prime Minister Binyamin Netanyahu has reportedly decided to postpone the cabinet budget discussions until after the September-October holiday period over concerns that the Knesset will not approve the proposal as it currently stands.

The cabinet was supposed to begin reviewing the budget on September 2 and finalize its submission to the Knesset by September 13, under a timetable released last week by Netanyahu and Finance Minister Yuval Steinitz.

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The talks will now be held in mid-October, according to reports in the Hebrew-language business dailies, although no official announcement has been made. The Prime Minister’s Office and the Treasury did not respond to requests for confirmation.

Discussions between Treasury and Defense Ministry officials over defense expenditure, generally the largest component of the state budget, are still scheduled to begin on Wednesday.

The reports raise fresh doubts that the government will pass its 2013 state budget before the December 31 deadline. Should it fail to pass a new budget in time, the 2012 budget will remain in force next year – with each ministry receiving 1/12 of its usual allocation at the start of each month. Consequently, this would increase the possibility of early elections.

Labor chairwoman Shelly Yechimovich responded to the reports on Tuesday, calling the postponement “completely irresponsible” and saying that it would leave the country in “economic disarray.”

“The fact that Israel operates according to a biennial budget is grave enough, and now it turns out that even a budget formulated once every two years has been postponed to the last minute without any orderly administrative work,” she said.

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“This is the height of negligence and shows an inability to make decisions. The result will be a lack of a planned and intelligent state budget, or alternatively a rushed vote on various paragraphs without anybody reading the budget book and the Economic Arrangements Law in depth,”said Yechimovich.

The 2013 state budget will be the Netanyahu government’s first single-year budget, following the biennial budgets of 2009-10 and 2011-12. It is expected to include billions in expenditure cuts, complementing recently approved tax hikes.

Value-added tax will rise one percentage point to 17 percent on September 1, all income between between NIS 14,001- 41,830 per month will be taxed an extra 1% and all income above NIS 67,000 per month will be charged a 2% surtax from January 1, as part of a package worth an estimated NIS 14 billion per year to state revenues.

Bank of Israel Governor Stanley Fischer warned last week that the government will need to cut close to NIS 17 million if it is to meet its budget deficit obligations. Speaking on Channel 2’s Friday night news show Ulpan Shishi, Fischer said there was no need to remind Netanyahu and Steinitz of this, as “they already know it.”

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