"We need money from purchase tax on homes"

Finance Minister Yair Lapid told the Globes-BDO Ziv Haft Capital Market Conference, "It will remain in place, even if it costs Yesh Atid votes."

"I have gotten used to the title of finance minister. I dont regret taking the job. I entered politics because I want to change things. All my life, I was in the media, the place where you talk about what is wrong, but in politics you change things. If you really want to change things, you should be the finance minister. Only here do you have the opportunity to invest your life and change the direction of this huge aircraft carrier that is called the state," said Minister of Finance Yair Lapid at the Globes-BDO Ziv Haft Capital Market Conference at the David InterContinental Hotel in Tel Aviv today. He spoke with "Globes" editor-in-chief Hagai Golan.

Commenting on the support he receives from Prime Minister Benjamin Netanyahu, Lapid said, "I now know more than ever how the two jobs are tailored for each other. If I fail, the prime minister will fail. You cannot be a successful prime minister if your finance minister fails, because that means that your economy has failed. He also wants to succeed, which is why he helps me succeed. We passed the biggest budget cut in the country with 21 in favor and one against. This is not something which could be passed without the prime minister's support, and it forces us to cooperate."

Commenting on the defense budget cut, Lapid said, "It is necessary to examine whether defense spending increases as a proportion of GDP, or not. I dont go around proud of this cut. I am also a member of the security cabinet, and I am exposed to all the material that is not published on this matter, and my hands trembled when making this cut."

I support two states for two peoples

"The New York Times" today published an interview with Lapid, in which he discusses policy issues, such as vacating settlements. "I said things which are consistent with what I said during the campaign. I favor two states for two peoples. I talk about vacating settlements even though it is painful," he said at the Capital Markets Conference. "If there is something hawkish, it isn't in the facts, but in the feelings. You see the small smile when talking about vacating settlements. I dont belong to this kind of the Left; it's heartbreaking - you're not just evicting people from their homes, but taking away their dreams. I support two states for two peoples, but the big settlement blocs will remain in Israel."

Lapid added, "It is necessary to create the beginning of a process, because we're stuck on the old issues, but I support peace - and I will do everything to bring the government back to negotiations. Abu Mazen (Palestinian Authority President Mahmoud Abbas) is a theoretical father of Palestinian victimhood, and at this point I dont see him making one step in our direction. The dispute isn't over the right of return, Jerusalem, or refugees. The dispute is over fear, hate, and terror. We want peace and security, and they want peace and justice - and it does not move. I want to move it."

Commenting on his alliance with Habayit Hayehudi chairman Naftali Bennett, Lapid said, "I am part of the government, which is a right-wing government. The big money on the settlements has already been spent. Was it a historic mistake to waste billions in Yizhar C? Yes, but people are now living there. What do we do now? Ask them to stop natural growth?"

Asked about the blow to the "working man" caused by the austerity measures in the 2013-14 budget, Lapid said, "People feel, but there are the facts, and it is necessary to look at the deficit and the budget hole. My first job vis-à-vis the working man is for him to have a job. In Spain, there is 50% unemployment among the young and we must prevent a similar situation from happening here. My friend Riki Cohen bought for NIS 350 a month insurance against her and her husband from being laid off, so that the business around her will continue to work."

On what does Lapid base his forecast that things will be better here in two years? He said, "We are undertaking a comprehensive step, the sole purpose of which is to drive into the labor market people who are not working - a generality of course - the haredi (ultra-orthodox) man and the Arab woman. When you create jobs you create growth. When people are sure that the economy is being managed, it creates growth."

The top 1% is not exempt from sharing the burden

Lapid reiterated that, this time, when drawing up the budget, the Ministry of Finance did not first go to the pockets of the middle class. "We did not first go to the middle class. We also went to other groups, and your impression is wrong. We took the Law for the Encouragement of Capital Investments and raised it, we raised the tax on luxury goods, and we cancelled the child allowance for people who pay the surtax. In short, it was important for us that people realize that we're looking at the figures of the top 1%, and we're not exempting them from the burden," he said.

"We've set up a committee to examine debt settlements, royalties on natural resources, and a whole series of measures so that people won't continue to behave as they did before we had a new policy here."

Lapid promised to amend the Law for the Encouragement of Capital Investments, which allows big corporations to enjoy profligate tax breaks. "The law is not good. Israel made an agreement,, and this is the law that the Knesset passed. Many of my critics were in the Knesset when this law was passed. This didnt happen in the dead of night."

Commenting on the meeting with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) president and CEO Jeremy Levin about the company's tax rates, Lapid said, "I said that we would not accept this any more, and that we must begin negotiations. This is less popular. It doesnt matter what figure we'll reach, people will say that we could have done more. The country has existed for 60 years, I have been finance minister for two months, and everyone is screaming that we've done nothing, even though we're doing what is necessary so that the state will get money it's owed. We'll have to change the law.

"Take Intel for example, which was supposed to build a new fab in Beit She'an, but took the fab to Ireland instead. In Ireland too, they pay zero tax to Israel, and they've created no jobs here either. What can you do? You have to attract them here, and not depict them as an enemy of the state."

Lapid said that he was "very worried" about housing prices, saying, "This is an issue that we intend to deal with, but outside the structure of the Economic Arrangements bill. The housing cabinet is inter-ministry. To make real change in the issue, we're including all the factors, not just two pillars. Housing is the issue that I intend to tackle in the coming year."

Asked about the 3.5% purchase tax which will be levied on people moving upmarket, and the lack of logic of the tax, Lapid said, "This isn't a matter of logic, but of money. I'll be populist for a moment: taxing people moving upmarket is easier than taxing people who have nothing to eat. Still, they have money. I am aware that this creates a sense of unfairness and I dont like this law. We will try to find alternatives, but if can't find any, it will remain in place, even if it costs Yesh Atid votes."

Lapid concluded with a reference to Governor of the Bank of Israel Prof. Stanley Fischer' successor, saying, "His identity will be determined at a closed meeting between the prime minister and me, together with Fischer. The prime minister will be the first to hear from me whom I recommend."

Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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