Check the sums

The 2007 state budget was passed without proper study by the ministers or their professional staffers.

By
September 16, 2006 23:19
3 minute read.
shekel coins 88

shekel coins 88 . (photo credit: )

 
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When Prime Minister Ehud Olmert served as trade and industry minister - not too long ago - he was unsparing in his criticism of how during budget-wrangling season, ministers were misled by the Treasury's obfuscatory language, bamboozled with bookkeeping ruses, confounded by semi-truths, and confronted by faits-accompli. The Treasury would, Olmert complained, present intricate proposals in unwarranted haste and beset by the introduction of "goats" - ostensibly draconian measures which no one intended to implement but whose removal would eventually confer a sense of achievement on those strenuously opposed to them. The budget which Olmert's finance minister Avraham Hirchson submitted to the cabinet last week - and whose approval he secured amazingly in only ten hours of deliberation - could be well described in all the above terms which Olmert was so prone to using in years past. Indeed, Olmert's government seems to have outdone its predecessors in all the aforementioned criteria. The "goats" are most notable. For days, public discourse was preoccupied with the news that higher-education tuition fees were to be significantly raised, only to discover later that it wasn't even on the books. This was hardly a lone goat in the treasury's bustling barnyard. The budget steamrolled through isn't only massive (NIS 300 billion and involves numerous legislative initiatives), but it comes after a costly war that left Israel's North in need of massive cash transfusions and a military establishment crying out for more funding. To sail in ten hours through a sea of minutiae and fundamental breaches of original budgetary constraints would be a feat for the most seasoned of economic professionals, but is virtually impossible for politicians, most of them relatively new at their posts. The inevitable conclusion is that the budget was passed without proper, let alone exhaustive, study by the ministers or their professional staffers. Moreover, at this very early juncture in budget jockeying there was no palpable impetus for haste. A few weeks more would not have been ill-advised. This is not a transparent process and our fear is that it provides another instance of governmental flip-flopping, not unlike the way the recent Lebanese campaign was conducted. A cease-fire was first rejected but forces were kept at bay, then the truce was acceded to but forces were belatedly deployed in ineffective last-minute missions. Likewise with the blockade which wasn't to be lifted before a host of conditions were met, but then was removed in stark contradiction to all earlier pronouncements. It was already understood that this budget wouldn't continue the preceding budget's emphasis on growth due to the war's costs. Nevertheless, we could at least hope that it wouldn't signal backtracking to populism and wouldn't undermine previous accomplishments. Yet, as these lines are written, the political arena is rife with innuendo about projected tax hikes, or hikes disguised under the terminology of "termination of previous exemptions" - among them the VAT-free zone in Eilat. These, coalition parties are warned, would become inevitable if the Treasury fails to win Knesset approval for the budget as passed by the cabinet. Such moot tinkering with taxes could well be another "goat," but, by the same token, it might not. It's hard to tell because the ministers were given a budget proposal which lacked prerequisite revenue forecasts. Nothing was clearly detailed regarding the government's income in 2007. Similarly, despite a surfeit of ministers apparently consumed by social zeal, no assessment was provided about expected impact of the budget on the country's poor. The social conscience of most Labor ministers, for example, was assuaged with specific governmental largesse geared to win their particular support. As for Shas, moves are reportedly afoot to put largely idle minister Meshulam Nahari officially in charge of haredi educational expenditures. This is seen as a means to cool Shas ardor against the budget. In all, some NIS 800 million were purportedly set aside to help convert as many of the 24 ministers as possible. That's an outlay of some NIS 33 million per minister. If it doesn't do the trick in the Knesset, the government will aim to raise as much as NIS 3 billion by fiddling with tax exemptions and correcting "distortions" in the taxation system. This is hardly the way to eliminate waste and generate growth - the only ways the government can make ends meet on a sustainable basis.

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