Lapid contrite to Yesh Atid voters, defends budget

Finance minister seeks changes to tax breaks law in meeting with Teva CEO, stays firm on tourist VAT.

Lapid looking sullen 370 (photo credit: Marc Israel Sellem/The Jerusalem Post)
Lapid looking sullen 370
(photo credit: Marc Israel Sellem/The Jerusalem Post)
After days of intense criticism over his 2013-2014 budget plan, Finance Minister Yair Lapid on Saturday issued an apology to Yesh Atid voters for not being transparent enough, but defended the document as “necessary for the Israeli economy.”
Until the budget’s release on Tuesday, Lapid made himself scarce from the media, engaging the public only through occasional Facebook posts, speeches and public statements. Since then, he held an open Q&A session with reporters at a press conference, sat for an in-depth interview with Channel 2, and sent an email addressing the “Frequently Asked Questions” posed to him over his budgetary decisions.
“You deserve an apology. In recent weeks, I did not really provide you answers. I invested myself – totally and fully – in the important and complicated task of preparing the budget,” he wrote in Saturday’s email.
“This budget, which is necessary, is only the first step, and it will pass quickly. After it, the reforms will start,” he said, promising policy changes to bring down cost of living and ease the life of the working man.
“There will be a revolution in housing, in the labor market, in the cost of living,” he said, urging his supporters to give him time.
In his message, Lapid expounded upon a Friday meeting with Teva Pharmaceutical Industries CEO Jeremy Levin on how to amend the Law for the Encouragement of Capital Investments, which led to the four biggest companies in the economy getting 70 percent of the tax breaks as recently as 2010.
The two men agreed, Lapid said, to an expedited procedure to review the trapped profits of multinationals and tax benefits of corporations. He also turned down a request from tourist associations to maintain the value-added-tax exemption for foreign visitors and canceled the addition of a deductible for health funds.
Lapid reiterated his position that by including cuts to groups outside the middle class, such as haredim and the wealthy, he had fulfilled his campaign promise to protect the middle class.
“Yes, the middle class was hit, I don’t deny that for a moment, but at least this time it’s not the only ones whose pockets we’re going into,” he said.
Without tough cuts, he said, Israel’s credit rating would be reduced, meaning the costs for servicing the debt would rise by NIS 37 billion a year. That would mean a doubling of the budgetary cuts.
Turning to why he didn’t go to battle with the big unions, Lapid promised to still take on the Israel Electric Corporation and the ports, but said, “The goal is not to fight wars in order to get applause, but to change the situation.”
Concessions to Histadrut labor federation chairman Ofer Eini, he noted, prevented a strike that would cause NIS 2 billion of damage a day to the economy and worsen the deficit.
The letter followed a tough interview with Channel 2 reporters Danny Kushmaro and Keren Martziano on Friday, in which Lapid promised to “get the economy out of the mud it’s in, sooner than expected.”
When pressed on why the majority of the cuts and tax hikes were aimed at the middleclass working man, Lapid said socialism did not succeed anywhere in the world.
“I know the theory that says ‘Lets take [money] from the rich,’ and it didn’t succeed anywhere in the world.... I won’t ruin the Israeli economy just so they stop writing bad things [about me] on Facebook. I’m determined to do the right thing even if it’s not popular,” he said.
Much of the criticism aimed at Lapid focused on his lack of economic experience. He defended his choice to take the post of finance minister, reasoning that he is working with the best economists in Israel, and that the finance minister’s job is not to be an economist himself.
“I wanted to be the finance minister to find out ‘Where’s the money?’” Lapid said, referencing his campaign slogan. “With 19 mandates, no one could force me to sit in an office I didn’t want,” he stressed.
He added that previous finance ministers who had experience did not impress him.
“Just because someone has been a politician for 20 years, that doesn’t mean he’s ready for the Finance Ministry,” he said.
Lapid spoke ahead Saturday evenings demonstration in Tel Aviv to protest his budget proposal.
“I am stopping myself from going out to the square, taking a microphone and asking them, ‘Who are you demonstrating against? Are you protesting in order to lose your job? Are you protesting to have your apartment lose half its value? Are you protesting to have the economy around you collapse? You are protesting against yourselves. It doesn’t make any sense,’” he said.
When asked whether he intends to run for prime minister in the next election, Lapid told Channel 2 that he does, but that right now he is not running.
“There are no elections, and there won’t be on the horizon as long as it’s up to me, because we are making moves that will take a while, and I want to enjoy the fruits of our labor along with the public,” he said.•