Cabinet approves ‘economic safeguard’ package by wide margin

Cabinet approves ‘economic safeguard’ package by wide margin

Prime minister praises measures raising income and sales taxes and reducing ministry funding; Likud minister Kahlon votes against

Prime Minister Benjamin Netanyahu (center) attending a weekly cabinet meeting in July (photo credit: Uri Lenz/Flash90)
Prime Minister Benjamin Netanyahu (center) attending a weekly cabinet meeting in July (photo credit: Uri Lenz/Flash90)

The Cabinet on Monday passed a controversial economic package that included tax hikes and ministry budget cuts. Prime Minister Benjamin Netanyahu hailed the proposal’s approval as a “vital step that will safeguard Israel’s economy.”

The measures passed by a 20-9 vote. Welfare and Communications Minister Moshe Kahlon, a member of Netanyahu’s Likud party, voted against, along with Shas and Independence party ministers.

“My heart simply couldn’t allow me to vote in favor when I know that there are people who earn NIS 2,100 per month and they’re losing NIS 70 that would go to vegetables and chicken,” Kahlon said.

Earlier on Monday, 150 social activists protested the measure opposite the Prime Minister’s Office in Jerusalem.

The plan, which includes a one percent income tax and sales tax hike and cuts to the budgets of all ministries but Defense, Welfare and Education, is touted by Netanyahu and Finance Minister Yuval Steinitz as necessary to close the budget deficit while providing new social programs. The measures aim to add an estimated NIS 15 billion to the state treasury.

In the run up to the vote, several political figures voiced their opposition to the cuts and tax raises, including ministers from the Shas party and the Independence party, Public Security Minister Yitzhak Aharonovitch and Deputy Health Minister Yaakov Litzman.

Litzman said that if the budget cuts affected funding for psychiatric hospitals, he could not be held responsible for the well-being of patients.

“With one hand, [the government] promises benefits to the public, and with the other takes from them through taxes,” Housing and Construction Minister Ariel Atias told Ynet News Sunday.

However, most ministers from Likud and Yisrael Beytenu supported the package.

Labor leader Shelly Yachimovich slammed the cuts, saying they were the result of a failed economic policy. In an interview with Israel Radio Monday morning, Yachimovich said that the government was planning to overcome the deficit using the same economic measures that created the problem in the first place.

“Our welfare state is falling apart, services are crumbling. We must protect our country from unrestrained market forces. The state must take responsibility for its citizens,” said Yachimovich. “I agree that the hole needs to be filled, but not by increasing the sales tax, which falls unfairly on the shoulders of the poor.”

The measures met opposition in the public, with protesters taking particular exception to Netanyahu’s comment that there was “no such thing as a free meal.”

A message posted to Netanyahu’s Facebook wall recently by a mother struggling to get by despite years of paying taxes and service to the state gained tens of thousands of likes and begot a flurry of similar letters to the prime minister via Facebook against the measures.

“I know that you’ll knock on my door and I’ll open it and you’ll give me my free meal. How fun, eh? because for 18 years I haven’t done anything,” Tali Oz Albo wrote sarcastically. “I just sat and waited for my free meal. I don’t pay loads of money for my kids’ education. I didn’t open a business in the State of Israel and pay taxes from here to Honolulu…”

Netanyahu and Steinitz say the package is needed to pay for a series of programs implemented following last summer’s cost of living protests, including free schooling from age three.

Steinitz has said that he wants to use the measures to protect the country from going the way of several Euro bloc countries who have found themselves in harsh financial straits.

“This is a defensive line for Israel’s economy and for its citizens. Whoever suggests otherwise, whoever suggests that we proclaim that we are not on the edge of the deficit, [I] suggest Spain and Greece,” he said last week.

While Israeli media has reported the average Israeli family will end up paying an estimated extra NIS 1,700 per year, Netanyahu claimed that the new programs will end up putting citizens ahead financially.

Ilan Ben Zion contributed to this report.

read more: