Lapid: Budget critics 'live in la-la-land'

Knesset kicks off 45-hour debate ahead of last votes; final version significantly different from original draft

By LAHAV HARKOV, NIV ELIS
Lapid speaking at the Knesset 370 (photo credit: Marc Israel Sellem/The Jerusalem Post)
Lapid speaking at the Knesset 370
(photo credit: Marc Israel Sellem/The Jerusalem Post)
Forty-five hours of Knesset discussions and votes began on Tuesday afternoon with Finance Minister Yair Lapid and Finance Committee chairman Nissan Slomiansky defending the 2013-2014 budget from an onslaught of criticism.
“This is certainly a budget that changes priorities in the market. I understand the opposition doesn’t like it, and that’s their right, but it reflects what voters want and who they elected,” Lapid said.
He continued to taunt the opposition: “You don’t really want to stand where I’m standing, because it’s easier for you to sit there and criticize me. Tell me, how would you cover the deficit, with checks you got as a wedding gift? You’re in la-la-land, a fantasy land with no connection to reality!”
The finance minister touted his budget as one that makes everyone carry the tax burden equally and creates stability through fiscal discipline to encourage growth.
“We’re moving from a culture of handouts to a culture of work. Work is a Jewish and a social value,” he said.
Lapid promised the opposition that in a year and a half, when the next budget is brought to a vote, they will see that he was right and worked responsibly to cover the deficit.
Slomiansky presented the budget bill unenthusiastically, as a product of compromise: “This does not represent Lapid’s ideology perfectly, nor does it represent mine, but it’s the budget that is necessary now.”
The Bayit Yehudi MK defended the finance minister and Yesh Atid chairman as a fast learner.
“Lapid became finance minister even though he isn’t a Nobel-winning economist, and had to quickly prepare a budget. That’s tough, but that’s the reality in Israel,” Slomiansky said. “Lapid keeps learning and learning. Once we close this deficit, he’ll prepare a budget better reflecting our ideologies.”
The budget debate was scheduled to last nine hours on Tuesday, 12 hours on Wednesday, and 24 hours beginning at 9 a.m. on Monday.
Following the bill’s presentation, the discussion began with a speech by Meretz chairwoman Zehava Gal-On, who repeated several times that the budget is cruel.
“This is a cruel neo-liberal budget that hurts the weaker sectors and the middle class,” Gal-On said.
“This will deepen poverty and increase social gaps.”
The Meretz leader lamented that “big, strong corporations receive a gift from the government of NIS 30 billion, and then dental care is cut.”
MK Ilan Gilon (Meretz) said that he expected more from Lapid’s speech, calling it the “Lapidomator,” the name of a website that generates fake Lapid quotes.
Labor MK Merav Michaeli mocked the coalition as wearing “the emperor’s new clothes.”
“This budget is screaming ‘The emperor is naked!’” she said. “The budget is a declaration of values, and this one says, ‘My brothers, the working people, thanks for bringing us to this point, now don’t look to me for help.’”
MK Eli Yishai (Shas) compared the draft budget to the one passed when his party was in the coalition, saying that his party protected child allotments and housing benefits.
“This is a government of ministers who only know about poverty from polls or statistics, so they blame the poor. These ministers were born with silver spoons in their mouths and then explain that budget cuts help the weak. Some may believe that, but I never did. When the government doesn’t help the poor, the economy does badly,” Yishai said.
The budget discussed on Tuesday contained a slew of changes from Lapid’s original May proposal, though the overall framework remained the same.
While deficit targets of 4.65 percent for 2013 and 3% for 2014 remained in place, overall spending increased from NIS 388.34b to NIS 395b for 2013, and fell from NIS 408.06b to NIS 405.27b for 2014.
Prime Minister Binyamin Netanyahu intervened to scale back NIS 1b. of the NIS 4b. in defense cuts originally planned for 2013, though the defense budget is tentatively set to be NIS 3b. lower than Lapid’s original plan for 2014. The cabinet on Sunday approved a 4% overall reduction in ministries’ spending, including NIS 500 million cuts to those ministries whose budgets increased over previous years, including education, transportation and welfare.
The Knesset Finance Committee reached a compromise on National Insurance Institute monthly child allotments, which were to be slashed to NIS 140 per child across the board. Instead, they will now range from NIS 140 for each of a family’s first two children to NIS 354 for a fifth child.
The plan to raise income tax 1.5% across the board gave way to a progressive tax, distributing increases of 1%, 1.4% and 2% across the income brackets, setting the highest rate at an even 50%. Corporate tax will rise to 26.5%, 0.5% above the originally proposed 1% increase.
Changes in the tax code that would affect housewives and recent graduates were eliminated, as was a tax for homeowners seeking to buy new apartments.
Other portions of the original proposal had already been voted into law, including a 1% increase in value-added tax, bringing it to 18%; additional taxes on cigarettes and beer and changes to hard-alcohol taxes. But plans to eliminate the VAT exemption for tourists were nixed, as were fruit and vegetable VAT exemptions.
Due to the budget’s late passage, changes in the 2013 budget will have only a limited impact. For the first seven months of the year, the government ran on monthly disbursements of 1/12 the 2012 allocations; what’s left will be distributed for use in the last five months of the year.