Lapid warns against politicization, even as Treasury blocks rival housing plan

"I am a changed man," Lapid says in last day as finance minister.

By
December 4, 2014 20:58
2 minute read.
Yair Lapid

Yair Lapid. (photo credit: MARC ISRAEL SELLEM)

On his last day as finance minister, Yair Lapid warned the professional staff against allowing their work to be politicized, even as steps were taken to thwart a rival housing program.

“We cannot allow the Finance Ministry to return to the bad days, where you could see the fingerprints of political interests in every corner,” Lapid told the ministry staff in a parting ceremony Thursday.

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Yet even as he prepared to depart, the ministry worked to block progress on a rival housing policy. For months, Lapid has pushed his signature zero- VAT housing law, despite pushback from economists and the Bank of Israel. Analysts said the law, which would give some first-time home buyers a tax break, would boost demand and ultimately raise prices across the board. His chief economist resigned in protest over the plan, calling it populist.

Housing Minister Uri Ariel, on the other hand, championed a price-targeting law, which won praise for its idea of forcing contractors to commit to low final sale prices on homes in order to get permission to build on land. The two were ultimately linked, and passed the cabinet together. Critics of that law said it was too limited in scope to have a real effect.

While Ariel hoped to continue advancing his policy despite Lapid’s expulsion from the government, the Treasury took steps to block its passage without zero-VAT, arguing that the two were meant to go together.

While the zero-VAT focused on new homeowners, price targeting would also be open to homeowners looking to move.

While the Housing Ministry said the policy’s passage in the cabinet was good enough to move it forward, the Finance Ministry argued it needed to be approved again with new conditions that accounted for how it would affect the market without zero-VAT in place.

“The attempt by various officials to cancel a significant program to a solution that gives up land revenues in favor of a 20 percent or higher reduction in apartment prices is peculiar,” the Housing Ministry said.

In his parting ceremony from the Finance Ministry, Lapid lamented the list of things left undone as a result of the early election, such as reaching an agreement on a minimum wage increase for public sector workers, increasing budgets in social sectors and, of course, passing his zero-VAT law.

Looking toward the March election, Lapid made sure to tout the changes he succeeded in making as well, such as passing umbrella agreements to fast-track home-building in certain areas, reforms in the food market and increased funds for Holocaust survivors.

“When do you know you’ve had a real, deep and touching experience? When you look back and realize that you are not the same person after the experience as you were before. I am a different man,” he said.


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