Prime Minister Benjamin Netanyahu defended a package of tax hikes and budget cuts Tuesday night, saying he had done much to help the middle class, but needed to bolster the state’s coffers in light of world economic problems.
Netanyahu spoke to Channel 2 news a day after passing a package that will see VAT taxes and some income taxes rise while cutting the budgets of nearly every government ministry.
The measures have been touted by Netanyahu and Finance Minister Yuval Steinitz as necessary to close the budget deficit while providing new social programs. They are expected to add an estimated NIS 15 billion to the state treasury.
Denying that he is taking from the “middle class”, Netanyahu emphasized that his administration has done much for the population, including free education for children until the age of 3, lowering costs of cellular phone services, and investing in doctors and police officers in Israel. “The problem now” he said “is not so much in our expenses… the primary problem now is the state’s revenues.”
Netanyahu added that the “revenues have decreased not because of anything we are doing here, but because of what is happening around the world.”
He said that countries around the world are currently experiencing economic difficulties, and as a result, Israel’s export-based economy has suffered from dwindling sales, which in turn has resulted in decreased revenues.
“If there’s one thing I hate to do” the prime minister said, “it is to raise taxes. And I have lowered taxes twice during this administration. Now I am raising them slightly in order to bridge the gap… between our expenses and our revenues.”
Responding to claims that increasing the Value Added Tax (VAT) would hit the lower class the hardest, Netanyahu countered that while the increased VAT is expected to generate NIS 4.4 billion in 2013, it is important to realize that “the bottom 40% of the population only pays NIS 400 million” of that total increase.
The prime minister also responded to claims that he was leaving handouts to the ultra-Orthodox and budgets for the settlements alone out of political considerations, saying that that amount of money was actually very small.
Rather, he said that the “real money” has gone into building the security fence that has decreased the number of infiltrators entering the country by 90% and into subsidizing education for children until the age of 3, which benefits the middle and lower class families with working parents.
The prime minister said he had chosen to make the responsible decisions, rather than the easier ones, even if those decisions carry with them a political price.
Joshua Davidovich contributed to this report.