Tax hike, budget cuts to pass despite opposition (JERUSALEM POST) By GIL HOFFMAN, HERB KEINON, NIV ELIS 07/26/12)
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Prime Minister Binyamin Netanyahu is not expected to have a problem
getting cabinet approval for his plan to raise taxes and cut the
budgets of government ministries, despite a public outcry over the
proposals on Wednesday.
The cabinet will convene to vote on the plan on Monday instead of
Sunday due to the observance of the Tisha Be’av fast. Shas fiercely
criticized the plan, but its leaders admitted that they had no chance
of blocking it, because 15 of the 29 ministers are from Likud and not
one Likud minister has announced opposition to it.
Shas leader and Interior Minister Eli Yishai came out against
Netanyahu’s planned increase to the value-added tax, saying the
regressive tax hurt weak sectors of society.
“I think we need a progressive tax, so the rich pay more and the poor
pay less,” Yishai said in an interview with Army Radio. “It can’t be
that a middle-class person pays exactly what a rich person pays.”
Items like luxury cars, jewelry, restaurants and hotel rooms, which
the rich are more likely to purchase, should be taxed at a higher
rate than water, electricity, bread and life-saving medicine, he said.
Proposed budget cuts, the minister continued, involve the same
problem, hitting the weakest sectors of society by taking away vital
support and services. The funds are not coming off ministers’
salaries, he noted.
Foreign Minister Avigdor Liberman (Yisrael Beytenu) also criticized
Netanyahu’s initiative. He expressed frustration that he had not been
consulted about the move prior to Tuesday’s announcement, but said he
was waiting to see the final proposal before instructing his
ministers how to vote.
Habayit Hayehudi leader and Science and Technology Minister Daniel
Herschkowitz said he would also wait until he saw the proposal on
Monday before making a decision, adding that the nine days
culminating in the observance of Tisha Be’av are an inauspicious time
for making key decisions.
The prime minister, at a working meeting in his office on the new
economic steps that will come before the cabinet on Monday, explained
that “managing the national economy is like managing a household.
You must balance expenses and income, you cannot spend on everything,
you must choose.”
He said that major projects the country has undertaken over the last
year – such as building a fence along the Egyptian border to stop the
flow of infiltrators, upgrading the country’s firefighting
capabilities and dealing with the changing security situation in the
region – cost money.
Netanyahu said that on Monday, the cabinet would prioritize where the
country’s money should be spent, while maintaining a balanced budget
and not exceeding it.
The prime minister also said the government would ensure the “general
framework of revenues, because that is the way we preserve the
Israeli economy, unlike what is happening in Europe and in other
places in the world.”
According to Netanyahu, the employment rate in Israel is greater than
in almost any other Western country.
“We do not want hundreds of thousands of unemployed, we want Israelis
to work and earn a living, and that is what we are doing with a
responsible policy, as will be expressed by the cabinet next Monday,”
Finance Minister Yuval Steinitz said at the meeting that Israel had
successfully staved off the global economic crisis for three years.
“We have succeeded in preserving the Israeli economy and Israeli
citizens from the catastrophe that we see in America, Europe and
other places,” he said. “In order to continue doing so, we need to
maintain budgetary and economic responsibility.”
Steinitz said the government would “submit a series of steps that
will increase state revenues by billions of shekels, some immediately
and some in 2013.”
He said the steps were critical to maintaining the confidence of the
international community, credit rating companies and investors.
The finance minister said that the steps to be brought to the cabinet
on Monday represent “the line of defense for the Israeli economy and
the citizens of Israel.”
“Whoever suggests otherwise, whoever proposes that we declare that we
will not meet the deficit target [now at 3 percent], suggests Spain
or Greece,” he said. “One should see what is happening in Spain or
Greece and understand that whoever refuses to increase state revenues
and maintain budgetary and economic responsibility, brings Israeli
citizens closer to what is happening in Greece, Spain, Italy and
other places.” (© 1995-2011, The Jerusalem Post 07/26/12)
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