The cabinet this evening approved a package of austerity measures with 20 ministers voting in favor and 9 against as dozens of protesters demonstrated outside of the Prime Minister's Office in Jerusalem.
Prime Minister Benjamin Netanyahu said after the vote, "This is a responsible step that will protect Israel's economy and the jobs of its citizens. Even after this package of measures is approved the disadvantaged and middle classes will still have more money in their pockets."
The cabinet approved a package that included raising VAT from 16% to 17%, a 1% hike in income tax for monthly salaries above NIS 8,881, and a 5% cut in the budgets of ministries.
The ministers whose ministries were hit by the cut expressed strong opinions on the matter but in contrast to such discussions in cabinet in recent years today's meeting was dull and described by some ministers as "boring." There was no horse-trading, so typical of this type of situation in the past, and there were some suggestions by government sources that the cabinet meeting was deliberately dragged out to create the pretense of ministerial opposition to the austerity measures.
The education ministry will only see a 1% cut and the internal security ministry will have its budget cut by only 3%.
Governor of the Bank of Israel Stanley Fischer attended the meeting to lend Netanyahu and Minister of Finance Yuval Steinitz his moral support. He said, "The measures brought before us today are painful but less painful than we would need to do in the future if we did not act immediately. I want to stress that the measures that the prime minister and finance minister are binging now are not only vital but courageous measures. In my career I've seen enough governments that said there's always tomorrow, let's wait, and someone else will deal with it. To such a claim I say in all sincerity there is a need to deal with it immediately and deal with it now and this is a responsible and courageous step."
The austerity measures will be brought to the Knesset for approval next week.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012