'Gas hike reduction not forced by public pressure'

Steinitz says move within constraints of budget, rejects claims that PM ruled to cut gas tax behind his back as populist gesture.

April 1, 2012 10:11
2 minute read.
Finance Minister Yuval Steinitz

Finance Minister Yuval Steinitz 390. (photo credit: Marc Israel Sellem)


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Finance Minister Yuval Steinitz on Sunday defended Prime Minister Binyamin Netanyahu's intervention to reduce the size of a planned gas increase, saying that the move had been "discussed since Monday" and was not made as a result of public pressure.

Netanyahu's announcement came shortly after Steinitz had made a television appearance on Channel 2, defending the price hike as a necessary evil, given the importance of sanctions on Iran, which have driven up world oil prices.

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The price of gas rose at midnight by 5 agorot, instead of the planned 20 agorot hike, meaning that one liter of gas at a full-service station will now cost NIS 8 ($8.16 per gallon), and a liter of self-service gas will cost NIS 7.79 ($7.95 per gallon).

Steinitz rejected claims that the move was a populist gesture by Netanyahu, made behind the finance minister's back. He said in an Army Radio interview on Sunday that the decision was made "within the constraints of the budget." According to a statement released by the Prime Minister’s Office, the revenue lost by the decreased tax will be made up through “efficiency” measures to be employed by each government ministry. Under the plan, ministerial staffs will be reduced by some 2 percent, as retiring employees will not be replaced.

Steinitz argued that the gas tax decrease would not have been implemented if it could not be done so in a responsible manner. "I am not mad, this is a reasonable move which gave the most correct answer financially."

He said that it was "very good" that Netanyahu be given credit for lowering prices after he had defended the price hikes on television.

Steinitz stated that the government had continually worked to lower fuel and electricity prices during his tenure as finance minister. He said that the government had also succeeded in lowering unemployment and raised the minimum wage at a time when jobless rates had risen worldwide.

Interior Minister Eli Yishai on Sunday accused the Finance Ministry of trying to arouse fear in the public and the government over government spending.

In an interview with Israel Radio, Yishai said that Israel can afford to increase the deficit and decrease tax revenues, measures he said are called for in a time of social distress.

Steinitz downplayed the role of social justice protests in influencing the government's fiscal policies. He cited the Sheshinsky Committee, which increased the public share of natural gas revenues at the expense of "tycoons," as a move meant to ease the economic burden on the public, that preceded the social justice protests.

Herb Keinon contributed to this report.

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