Netanyahu defends tax rise in media blitz

Prime minister shoots back against criticism on his economic policy, calling a good economy "the most important social justice."

July 31, 2012 20:55
2 minute read.
PM Binyamin Netanyahu at weekly cabinet meeting

PM Binyamin Netanyahu at weekly cabinet meeting 370. (photo credit: Pool / Flash 90)

Prime Minister Binyamin Netanyahu shot back against critics of his economic policies, which raise taxes and cut budgets, in a flurry of televised interviews on Tuesday night.

Speaking to Channel 1, Netanyahu said that maintaining a vibrant economy is the most important kind of social justice.

"I have a responsibility to watch over the economy, and that is the most important kind of social justice," Netanyahu said in defense of the government's decision to cut budgets and raise taxes.

Netanyahu argued on Channel 10 that society's weakest sectors would only be affected by 3 percent of the approved tax increases, highlighting that capital gains, corporate tax, and taxes on the wealthy accounted for a majority of the NIS 15 billion in new government revenues.

He also said that the economy had added 360,000 new jobs and that the government had provided education from age of three, higher salaries for teachers, doctors and police and lower cell phone rates.

Relative to the crisis in Europe, the stagnation in the US and the slowed growth in China -- all factors Netanyahu cited as dragging on Israel's export-based economy -- Israel was still doing rather well, Netanyahu told Channel 2.

Earlier on Tuesday, Finance Minister Yuval Steinitz decided to postpone the one percent Value Added Tax increase by one month, following consultation with Knesset Finance Committee Chairman Moshe Gafni.

VAT was supposed to rise from 16% to 17% on Wednesday August 1, but the increase will now be implemented September 1 in order to allow businesses time to prepare, the Treasury said.

The cabinet approved the VAT increase Monday as part of a series of sweeping austerity measures that it hopes will raise NIS 14.15 billion next year and reduce the budget deficit by 1.5%.

The austerity package included a 1% income tax hike for those earning NIS 8,881-41,830 per month, 2% surtax for all income above NIS 67,000 per month, and across-the-board expenditure cuts.

Finance Minister Yuval Steinitz admitted before the cabinet vote that the much-criticized reforms were “not enjoyable,” but stressed that the government must show it will meet next year’s 3% deficit target and maintain Israel’s “good image” as an island of economic stability and place for investment.

Gil Hoffman and Nadav Shemer contributed to this report.

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