Interior Minister Eli Yishai announced Wednesday that his party had signed a deal with the Treasury agreeing to support the across-the-board tax hikes in exchange for the Treasury waiving planned budget cuts to the Shas-held ministries of Interior and Housing.
The tax raises, approved on Monday, are part of a package of measures officials said are needed to finance economic reforms, including free schooling from age three, and to head off economic crisis.
All the ministries’ annual budgets — with the exception of education, welfare, and the military — were to be cut by 5% in an effort to prevent the economy from plummeting into a recession. The ministerial cutbacks are expected to save NIS 700 million over the next year.
According to Yishai, “Israel’s local authorities and thousands of people in need of public housing were saved today from harsh cuts, thanks to our uncompromising stance.”
Housing Minister Ariel Attias welcomed the agreement, writing on his Facebook page: “We will now enjoy a significantly larger budget, increased public housing stock and other benefits.”
The Independence party has also reached an agreement with the Treasury that cuts amounting to approximately NIS 68 million will be waived on education-related issues (such as daycare centers and technical schools).
Also canceled on Wednesday were NIS 100 million in cuts to be imposed on the Defense Ministry. The Finance Ministry had introduced them after Ehud Barak and other MKs from his Independence party voted against the fiscal package at Monday’s Cabinet meeting.