Minister of Finance Bezalel Smotrich has presented the 2023-2024 state budget, which for 2023 will total NIS 484 billion, and for 2024 it will total NIS 514 billion.
During a press conference he said, "I was torn between the desire to go with what I really wanted economically and the understanding that in the end ministers should be allowed to implement their policies. For example, I am not sure that I believe that Minister of Transport Miri Regev's public transport reform is something I would promote myself. But this is her agenda and we should allow ministers to implement their plans, while maintaining the budget frameworks."
The Minister of Finance referred to the salary agreement with the teachers and said that "We inherited a salary agreement with the teachers that I have a lot to say about. There was an election period and they signed what they signed. We are dealing with it now."
In addition, the Minister of Finance announced good news for parents: the expansion of tax credit points for children aged 12-18. According to Smotrich, the benefit is worth about NIS 2,800 per parent per child per year. Smotrich said, "It still needs to get through the Knesset and we hope it will happen this year."
On day care centers, Smotrich said: "The costs have become more expensive and we will increase the funding for the day care centers, but it will in no way fall on the parents' pockets, but on us."
We see strong demand for investments in Israel
Smotrich was asked about the judicial overhaul being promoted by the coalition. "There is an important amendment in the law that will ultimately strengthen the Israeli economy," he said. "It will reduce legal interference. I'm not saying that this hasn't become an issue, but I think it's not because of the reform but because of the way things are interpreted. I see great demand for investments in Israel. There is a political issue here, there have been large demonstrations in Israel. I take responsibility as Minister of Finance, We are managing events and part of the management is to pass a responsible budget that maintains a margin of safety."
In response to a question from "Globes" about a clause in the budget that would harm tax benefits in pensions, Ministry of Finance Budgets Commissioner Yogev Gradus said, "We thought it would be right to balance the benefit, and we are not harming anyone in the immediate future. A hearing will be held regarding this change, and it will be considered seriously. This is a regressive benefit and we want to take care of it, through budgetary distribution, which is a more correct policy."
Record confusion
Passage of the budget has broken records in terms of confusion and last-minute changes. After a stormy night of negotiations on Thursday marked by raised voices and delays, the ministers finally voted in favor of the budget on Friday at noon. Treasury officials worked all night drafting the budget clauses in a Word file, and did not have time to compile the orderly budget documents by Shabbat. It was only on Sunday that the government ministries and the various authorities received a document that sets out all the changes made to the Economic Arrangements Law during the negotiations. The list of rewrites encompasses about half of the reforms that the Ministry of Finance sought to introduce alongside the budget.
Since the ministers voted on the budget in a hurry, even before the final agreements were expressed in the budget documents, the budget approval procedure in the government has not yet been completed. Another cabinet debate may be required to validate the last-minute changes, including the distribution of the coalition funds, which were disbursed in billions of shekels at the end of the negotiations to get the ministers to vote in favor of the budget.
The spending limit allowed by law was breached in a way that made it possible to increase the budget by NIS 17.7 billion in 2023 and by NIS 25.9 billion in 2024. Yet, this was not sufficient for all the expected expenses in the budget against allowed spending, and also in relation to expected fall in state revenues.
Because of this, the cabinet decided to impose an across the board cut of 3% in 2023, an additional 3% in 2024 and an additional 1.5% in 2025. It was also decided to make a 2% cut in staffing levels for employees of ministries and 0.5% for other government employees in each of these years. NIS 7 billion of the budget will be for coalition agreements in 2024.
Published by Globes, Israel business news - en.globes.co.il - on February 28, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.