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Netanyahu: No big tax hike in 2013 budget (JERUSALEM POST) By NADAV SHEMER 06/05/12)Source: http://www.jpost.com/Business/BusinessNews/Article.aspx?id=272783 JERUSALEM POST JERUSALEM POST Articles-Index-TopPublishers-Index-Top
Prime Minister Binyamin Netanyahu intimated Tuesday that the 2013 budget would not contain a large-scale tax hike, saying that what has worked until now would continue to work in the future.

Netanyahu spoke at a press conference at his Jerusalem office alongside Finance Minister Yuval Steinitz and visiting Organization of Economic Cooperation and Development Secretary-General Angel Gurria.

Media reports have suggested this week that next year’s budget will include large-scale spending cuts and increases to value added tax (16 percent up to 17%) and corporate tax. The Treasury released data Tuesday showing a NIS 18.4 billion budget deficit since the start of 2012. It blamed this mainly on a NIS 11.3 billion shortfall in tax revenues.

“There is no conflict between managing a free economy and social justice,” Netanyahu said, adding that Israel has produced strong growth and reduced poverty and unemployment in the face of global troubles due to the government’s policy of limiting expenditure and not raising taxes.

The prime minister explained that the government would continue to focus on breaking up cartels and monopolies, encouraging people to enter the workforce and enabling them “to benefit from having more money in their pockets.” Raising taxes too excessively would be counter-productive, he said, as this would discourage people from working.

Finance Minister Yuval Steinitz said budget preparations would continue for several more weeks. He warned that the government faced a choice between responding to some public demands without breaking the budget or answering to every need and exposing the country to the risk of becoming the next Greece, Spain, Portugal or Ireland.

Gurria complimented the government for its responsible economic management and for achieving impressive results in the areas of growth, employment, inflation and debt-to-GDP ratio. He too warned against drastic tax hikes, saying that Israel can improve its long- term economic situation by introducing public service and workplace reforms, improving the education system and dealing with over- concentration.

Opposition Leader Shelly Yacimovich accused Netanyahu of being detached from reality, saying that OECD data show that Israel suffers from one of the highest rates of poverty and inequality in the world.

“Netanyahu boasts about growth statistics, but forgets to mention that this goes into the hands of the richest thousandth only,” she said in a press statement. “His intention to introduce budget cuts adds insult to injury, and will force the middle class to once again fund from its own pockets those services which the state should supply.”

Meretz leader Zehava Gal-On said it was “outrageous” that Netanyahu holds such an “archaic” economic mindset at a time when his policies only serve to expand income inequality. She slammed the prime minister for planning to grant billions of shekels in tax exemptions to large companies and raise the VAT, and urged him to instead lower tax rates for smaller businesses and increase them for the largest.

Meanwhile, Vice Premier Shaul Mofaz said during a meeting with the Federation of Israeli Economic Organizations that Netanyahu and Steinitz must consult with employers and workers before making any decision on the 2013 budget. (© 1995-2011, The Jerusalem Post 06/05/12)

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