Lapid's housing program incorporates rival plans, 0 VAT

With comptroller's report on housing crisis pending, Lapid says goal is to make housing affordable for young couples.

By
February 22, 2015 15:36
4 minute read.
Yair Lapid.

Finance Minister Yair Lapid.. (photo credit: REUTERS)

Yair Lapid on Sunday unveiled Yesh Atid’s strategy for lowering the cost of housing, but the plan largely sticks to programs the party has advocated in the past – including the controversial “Zero VAT” policy – alongside variations of proposals of rival parties.

“We have just one goal. That every young couple from the Israeli middle class will succeed in buying an apartment,” Lapid said in Rosh Ha’ayin, one of the sites where he signed an “umbrella agreement” as finance minister to help fast-track infrastructure and apartment building.

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Lapid’s plan comes as State Comptroller Joseph Shapira prepares to issue a report on the housing crisis in the lead up to March 17 elections.

The comptroller has rejected pressure to delay publishing, but has not yet announced when the report will be published. Several media sources say it will be released this week.

The newer elements of the plan involve doubling the number of land-planning committees to help speed up the process of getting land ready for building and housing units out to market.

Lapid promised to slash the bureaucracy that has made Israel’s construction process one of the most onerous in the world. He also called for a new body to oversee real estate and construction companies.

But much of the plan was comprised of old ideas that have not yet been implemented, been partly carried out or have been suggested in some form by rival parties For example, Lapid called for expanding the role of the housing cabinet he created and chaired following the last election; expanding its responsibilities; and transferring the Israel Land Authority and the Interior Ministry’s planning administration to the cabinet’s chairman.

In an interview with The Jerusalem Post earlier this month, the Zionist Union’s Manuel Trajtenberg called for creating a ‘“Housing Czar” that would put all the relevant processes under one roof.

Koolanu leader Moshe Kahlon called for a similar process.

Lapid also said that each year for the next five years, undesignated land should be given for free to private planners in exchange for commitments of hard planning deadlines, apartment quality and maximum price. The planners each could build as many as 1,500 units for an annual building total of 10,000-15,000 units. Trajtenberg, too, has called for giving free land in exchange for agreements on affordable housing, while Kahlon has called for introducing private players into the planning market.

Lapid’s plan retreads well-worn ground; he called for expanding the price targeting Construction Minister Uri Ariel already has begun, as well as the process of clearing IDF bases, which Prime Minister Benjamin Netanyahu has taken credit for advancing, though Lapid also had expressed support for that initiative.

Lapid also promised more umbrella agreements and called for passing the fair rental law he and Tzipi Livni presented together just days before the last government coalition fell apart.

Still embedded in the program was Lapid’s controversial plan to exempt some young couples from paying VAT on their first new home, which has earned the scorn of many economists because it would increase demand instead of addressing the supply issues that plague Israel’s real estate market.

In an interview with the Post last week, Lapid said he stood by the plan because, “It’s the right thing to do. It may not be economical, but it’s the right thing to do.”

Yet, in addition to the original Zero VAT plan, Lapid introduced another proposal to eliminate the tax on construction work for building new apartments through the “38 plan” urban renewal code, which incentivizes building owners to add apartments.

Lapid also reiterated calls for building 150,000 long-term rental units; 5,000 dorm rooms for students; and re-examining eligibility criteria for public housing. Like Trajtenberg, he called for incentivizing local authorities to build smaller apartments, which are more affordable and appropriate for young couples, but earn cities less tax revenue.

The response from political rivals was bitter and swift.

“In Lapid’s view, everyone is responsible for the increase in housing prices, everyone except the finance minister and chairman of the housing cabinet,” Netanyahu’s Likud party wrote in a statement. Lapid, the party said, was responsible for delaying the price target plan and IDF base move he now championed.

“In fact, Lapid torpedoes every serious plan that could have brought results just so he wouldn’t have to admit that the Zero VAT plan, conceived for public relations purposes, was a complete failure based on every rational assessment, and was likely to bring an increase in prices and waste public funds,” it continued.

Kahlon, too, said Lapid was running from responsibility, claiming he only released the new plan for fear of what the State Comptroller’s Report will say.

“He is trying to blame his resounding failure in solving the housing crisis on Netanyahu alone. This is a severe shortage of self-awareness and understanding of the economic reality,” Kahlon’s Koolanu said. Housing prices increased 17% under his tenure as finance minister, the party added.

The Zionist Union’s Isaac Herzog, on the other hand, had little problem putting the blame on Netanyahu, his central political rival.

“Anyone who wants a house in Israel knows what will be written in the [comptroller’s] report that Netanyahu wants to bury in order to cover up his failures,” Herzog said.

Yonah Jeremy Bob contributed to this report.


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