Meretz unveils NIS 26.5b economic plan

Plan promises to “restore the welfare state.”

Caption from L to R: Ilan Gilon, Zehava Gal-On, Yaron Zelicha (photo credit: NIV ELIS)
Caption from L to R: Ilan Gilon, Zehava Gal-On, Yaron Zelicha
(photo credit: NIV ELIS)
Meretz unveiled a NIS 26.5 billion economic plan on Monday that it promised would “restore the welfare state,” calling for breaking spending caps to significantly increase the size of the public sector.
It also became the first party to offer a detailed plan to pay for its spending, saying that deficit targets and lower debt were important, though not sacred.
“We’ve seen politicians who for years say we have to deal with the cost of living and nothing happens,” Meretz leader MK Zehava Gal-On said at the economic platform’s unveiling in southern Tel Aviv.
The plan, which it said would put NIS 1,500 worth of savings in every family’s pocket, included a laundry list of welfare improvements. It called for opening 800 new day care centers, longer school days, increasing the health budget by 2 percent and abolishing the value-added tax (VAT) on medication.
The antitrust authority should act more strongly against food monopolies, and more price controls should be enacted, the party said.
On energy, it wanted to get rid of the natural gas monopoly (an issue currently under fierce negotiations between gas companies and the antitrust authority), introduce new electricity suppliers to the market, eliminate VAT on water, and abolish the water corporations.
The party also called for increasing the number of bus drivers, running public transportation on Shabbat and eliminating the rabbinate monopoly on kashrut certification.
Its main solutions on housing came from increasing affordable, and public housing, more heavily regulating the Israel Land Authority, and increasing supply through urban renewal efforts for 100,000 housing units.
Interestingly, many of its plans for structural reforms – such as separating credit cards from banks – echoed those of Moshe Kahlon’s Koolanu party. It also laid out some steps that the Zionist Union’s Manuel Trajtenberg called for, such as expanding alternative forms of banking.
“There’s no question that other parties deal with a lot of things we deal with. The difference is the concept, the approach,” Gal-On said. “We are not presenting a neoliberal program, we’re presenting a social democratic program that will bring back the welfare state.”
In fact, the party leaders went to great lengths to distance themselves from Trajtenberg, whom they portrayed as a neoliberal capitalist.
“Whoever wants to make a change with NIS 6b. doesn’t know what a serious change is,” MK Ilan Gilon said, referring to the less ambitious scale of Trajtenberg’s spending plan.
“Trajtenberg is not our economic prophet.”
To pay for everything, the party proposed reforming the law for capital investment, an estate tax, adding a new income tax bracket for very high income earners and capital gains, making health taxes more progressive, taxing empty apartments and lands that are not being developed. They also called for canceling NIS 5b.
of additional budget transfers for defense they say take place beyond its budgeting each year and pulling NIS 1.5b. in additional funding from settlements.
Asked if they were concerned that cutting investment incentives like the ones that helped convince Intel to invest $6b.
in Israel instead of its competitor Ireland, Gal-on responded, “We always hear these urban legends that if we don’t get the incentives then these big important companies will leave. It’s inconceivable that we will have this extortion from big companies saying, ‘If you don’t pay us we’ll leave.’” Even if the party pays for all its spending, however, it would still need to find other places to cut, or further revenues to stick to the deficit target. The Bank of Israel noted last week that even with the spending limit in place, NIS 8b. of new revenues would be needed by the end of the decade. Meretz only presented revenue sources for new spending, not increases already set into law.
Yaron Zelicha, a left-wing economist and former finance ministry official, who used to affiliate himself with the Labor Party, endorsed the plan.