Lapid budget calls for widespread cuts

Finance minister's plan includes 1% hike in VAT, slashing child allotments, government wages and defense spending.

Lapid Netanyahu at Knesset swear in 370 (photo credit: Marc Israel Sellem/The Jerusalem Post)
Lapid Netanyahu at Knesset swear in 370
(photo credit: Marc Israel Sellem/The Jerusalem Post)
Finance Minister Yair Lapid on Thursday presented Prime Minister Binyamin Netanyahu with his outline for the 2013-2014 state budget, which includes new taxes and billions of shekels worth of cuts to projected spending.
Though the budget plan was not made public, it reportedly includes sharp cuts in child allotments, government wages and defense, plus a 1 percent increase in value added tax.
According to the Calcalist, the budget outline includes NIS 14 billion in cuts for 2013, an additional NIS 6b. of cuts for 2014 and NIS 6b. in additional tax revenues in both years.
Those spending cuts include NIS 4b.-5b. from the civil service, NIS 3b.-4b. from defense, with an equal amount from child allotments and NIS 2b.-4b. from infrastructure spending.
Yet a representative for Lapid would disclose only that the budgetary framework includes new taxes on affluent goods such as luxury apartments and cars.
Opposition leader Shelly Yacimovich dismissed the luxury taxes, saying, “The ridiculous, populist attempt to sell to the Israeli public that the solution to a deep deficit will come from taxing luxury cars is simply an insult to the intelligence of the nation’s citizens.”
She accused Lapid of trying to cover up the damage his budget would cause the middle class and workers.
“The upcoming meetings between the finance minister and prime minister are completely extraneous, as Netanyahu wrote the program himself and already authorized it exactly, even before the election,” she said.
Lapid and Netanyahu were scheduled to continue their meeting on Sunday.
Meretz chairwoman Zehava Gal-On praised the taxes as a welcome step, but agreed they were not enough.
“If Lapid wants to prove that he will take the money to cover the deficit from the wealthy, he can’t settle for taxing their cars,” she said. “The big money Lapid is looking for is in tax exemptions enjoyed by a handful of huge companies and the aggressive tax planning of tycoons and capitalists.”
Hadash MK Dov Henin added that while he was “in favor of taking money from those who have plenty,” he was also “utterly opposed to making the burden heavier on the forgotten middle class, on the working public and the marginalized groups who receive benefits.”
A late-night meeting between Lapid and Histadrut labor federation chairman Ofer Eini on Wednesday, in which Lapid tried to rally support for lowering wages in the public sector, ended without agreement.
The same day, Transportation Minister Israel Katz spoke out against purported delays to infrastructure projects such as building railway lines and road projects, saying they would harm economic growth.
On Tuesday, Yacimovich blasted Lapid over rumors that he planned education cuts that would raise university and college tuition by 20%, rumors he denied in a post on Facebook.
Lapid himself sent out a statement on Monday night, unprompted, announcing that he had saved women from enduring a half-point tax benefit cut worth NIS 109.5 a month, which costs the government NIS 700 million a year.