The cabinet passed the budget with the support of every minister save
Environmental Protection Minister Amir Peretz early on Tuesday, after a full
night of deliberations, negotiations and last-minute changes.
close to the minister recounted on Wednesday that shortly before the cabinet
vote, at about 3:30 a.m., an agitated Peretz asked for permission to speak, even
though Prime Minister Binyamin Netanyahu requested that the meeting end quickly
ahead of his flight to Russia.
“I entered this government. It
wasn’t simple; it was difficult for me, but I was sure about one thing – that
this is a democratic government,” he said. “When decisions are made [in the
cabinet], it is my responsibility to defend you in the Knesset and vote with
you, but what I didn’t know is that someone would take away my right to vote
according to conscience in the government. Red lines have been crossed. This is
Peretz said that Finance Ministry officials refused to
speak to him or to his ministry, only making it clear that less funds would go
to the Environmental Protection Ministry if he did not vote in favor of the
“For someone to condition my budget on how I vote is
unacceptable,” he said.
“Where do these threats come from? Why should my
whole ministry have to pay for me following my conscience?”
Yair Lapid requested that Netanyahu stop the vote, and he and Peretz along with
Treasury staff held a meeting outside the cabinet room.
In the end, the
Environmental Protection Ministry received an additional NIS 130 million, and
Peretz, who said the budget goes against his social ideology, voted against
Other last-minute changes to the budget were across-the-board
spending cuts – excluding the defense budget and welfare spending – of two
percent in 2013 and 3% in 2014 and a decision to increase corporate tax 1.5%
instead of just 1%, which will bring it to 26.5%.
Lapid maintained that
authorization of the budget was the first phase in improving the Israeli way of
“Soon, a law for equality of the army and civilian service burden
and the economic burden will be submitted for government approval and the
housing cabinet will begin implementing a national housing program that will
lead to reduced housing costs in Israel,” Lapid said after the budget’s passage.
He also promised to reform the Israel Electric Corporation and ports, and find
ways to prevent big corporations from paying zero income tax.
also included changes in the education system, a “Going to Work” program to
incentivize people to join the labor market, cuts in child allowances and their
elimination for people with annual incomes over NIS 800,000, recommendations on
how to lower food prices, capture “black capital” – uncollected tax revenues –
and reduce MK salaries.
Writing later on Facebook, Lapid said that
although the budget was a tough one, it would lead to better economic conditions
within a year and a half.
Federation of Israeli Chambers of Commerce
President Uriel Lynn slammed the budget, calling it “uglier and more
disappointing” with every passing day.
Lynn said the idea that raising
taxes would increase revenues is “a testament to a complete lack of
understanding in the field of economics,” and predicted that revenue forecasts
would not be met.
Instead of raising corporate taxes that hurt businesses
while making only “cosmetic changes” to the big corporations that indulge in
massive tax breaks, Lynn said, Lapid should have eliminated all tax exemptions
except those on personal savings and dealt with outliers in public sector wages,
reducing those over NIS 20,000 a month.
Tourism Minister Uzi Landau
praised the Finance Ministry for canceling its plan to charge incoming tourists
VAT, following his ongoing battle against the policy.
took responsibility – not only for 200,000 workers in tourism, but for the whole
market,” Landau said. “I could not accept a situation in which thousands of
workers would go home, because I believe in the power of tourism as a catalyst
for economic growth and because the government has a responsibility for
considering long-term ramifications.”
Opposition leader Shelly Yacimovich
took a less-rosy view of the budget vote.
“After all the nice words, the
smiles and promises of new politics, we’re repeating the mistakes of old
politics, and even worse,” she said.
Yacimovich called the new budget “a
ringing slap in the face to the public,” which breaks the parties’ promises of
new priorities and help to the middle class while “cruelly trampling the
“The across-the-board spending cuts that were added overnight show
the character of the new government – lacking in vision, courage or leadership.
This budget is full of despair and does not have even one engine for growth and
We will fight a bitter struggle in the public and the parliament in
order to moderate the difficult cuts and help the citizens of the country,” she
added.Noa Amouyal contributed to this report.