"The 2015 budget bears a social message. The preceding budget was a crisis budget, while the current budget is one of hope and security," Minister of Finance Yair Lapid said today at a press conference in the Ministry of Finance. In presenting the main points of the 2015 state budget, Lapid promised passage of the 0% VAT plan "even before the budget and at the beginning of the upcoming Knesset session." Commenting on the widespread criticism of the plan by economists and politicians, Lapid said, "It's a pity that self-interested parties have delayed the plan for narrow political reasons, even though they know that the plan will change the housing market and lower prices."
Participants in the press conference unveiling the budget included Deputy Ministry of Finance Mickey Levy, Director General Yael Andorn, Budget Director Amir Levi, Accountant General Michal Abadi-Boiangiu, Israel Tax Authority Director Moshe Asher, chief economist Yoel Naveh, Supervisor of the Capital Markets, Insurance, and Savings Dorit Salinger, and legal advisor Yoel Briss.
The main points of the budget agreed on by Lapid and Prime Minister Benjamin Netanyahu before Rosh Hashanah are a NIS 6 billion defense budget supplement, consisting mostly of one-time expenditures (compared with a NIS 2.5 billion permanent supplement in the original version); an increase to 3.4% in the budget deficit target (compared with 3.18% in the original version); no tax increases; and an increase in the social budget. NIS 4 billion of the NIS 6 billion defense budget supplement will be classified as a "box," meaning a one-time expenditure excluded from the fiscal rule limiting public spending in the budget framework.
"It's no secret that I was under pressure to raise taxes," Lapid said. "This view was heard at the Bank of Israel and also elsewhere, but after considering the matter in depth, together with senior ministry officials, we did not accept it. The last thing the economy needs now is more tax increases. Instead of raising taxes, we'll increase the deficit proportionately and reasonably. We'll make the government sector more efficient, and bring money from other sources, such as the Jewish National Fund - it's about time we subject it to the Foundations of the Budget Law. We'll charge more for natural resources, continue the ongoing improvement in tax collection, continue to close loopholes, eliminate tax planning, and wage war on illegal capital, as led by Mickey Levy and Moshe Asher."
Lapid added, "We'll offer minority holdings in government companies on the stock exchange, a revolutionary reform in which instead of government companies being under the thumb of the large workers committees and political wheeler-dealers, they'll be committed to proper and transparent administration." Commenting on the initiative to levy excise tax on coal, which was shelved, Lapid said, "The decision against raising taxes on gas and coal will result in Minister of Energy Silvan Shalom and I slashing the electricity rate by over 10% on January 1."
Lapid asserted that the measures he had taken since become Finance Minister had "saved the Israeli economy," and made it possible to pay for the operation (Operation Protective Edge, A.B.) and increase the social budget in the 2015 budget framework. Commenting on these initiatives, Lapid said, "The Minister of "Education and I are now concentrating on a new plan that will ease the lives of the working man in Israel. The goal is for him to know that most of the time he is at work, his child will be in an educational framework, not in the hands of a babysitter."
Lapid also promised to increase the budget of the Ministry of Internal Security by NIS 1 billion to make it possible to hire 1,100 policemen, prison keepers, and firefighters. The Ministry of Health budget will be raised by NIS 2.8 billion, and implementation of the German Committee recommendations will begin, at a cost of NIS 500 million. In addition, the Ministry of Welfare will receive a NIS 500 million budget supplement to pay for the Law for Autistic Persons, expansion of the nutritional security plan, and aid to needy families, a NIS 1 billion supplement for Holocaust survivors, and the "beginning of gradual implementation" of the Alaluf Committee.
Amir Levi said, "The 2015 state budget will total NIS 323 billion, with a special NIS 4.3 billion supplement ("the box") for the defense budget." Levi declared that despite raising the budget target to 3.4%, the Finance Ministry would plan consistently smaller deficits starting in 2016. "Operation Protective Edge highlighted the need to maintain this deficit plan, and it is therefore important to stress that the defense budget supplement is a one-time supplement," Levi stated.
Published by Globes [online], Israel business news - www.globes-online.com - on September 28, 2014
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