Thousands take to the streets to protest tax hikes

Demonstrators block major Tel Aviv highway, march on Prime Minister’s Residence; apologetic Lapid says better times ahead

Yifa Yaakov is a breaking news editor at The Times of Israel.

Some 10,000 people marched in Tel Aviv while hundreds more assembled in other locations in Israel on Saturday night to protest Finance Minister Yair Lapid‘s proposed budget cuts and tax hikes, in what organizers hope will mark a resurgence of the social justice protests of summer 2011.

Demonstrations took place in Tel Aviv’s Habima Square, in Jerusalem on the road from Gan Hasus to the Prime Minister’s Residence, in Haifa at the Horev Center, and in Modi’in.

The Tel Aviv protesters held up signs bearing slogans such as “Where’s the money? The tycoons have it, stupid” and “Let the corporations pay for the budget deficit.”

Another demonstration took place in front of the home of Energy and Water Minister Silvan Shalom’s home, in protest of the proposed export of Israeli natural gas. After holding a rally in front of the minister’s house in Ramat Gan, demonstrators walked toward the Ayalon Highway, central Israel’s major intercity freeway, and blocked it.

The Finance Ministry is looking to cut government spending by some NIS 6.5 billion (almost $2 billion) in 2013 and by NIS 18 billion (some $5 billion) in 2014, largely through the cuts in defense (NIS 4 billion or $1.12 billion), child benefits (NIS 2 billion or $560 million) and transportation infrastructure projects (NIS 1.2 billion or $336 million). Those measures are meant to slash a burgeoning national deficit that in 2012 reached NIS 39 billion ($11 billion), 4.2 percent of the gross domestic product.

The Finance Ministry also raised value-added tax by 1 percent (to 18%), increased income tax by 1.5% across the board, and boosted corporate tax to 26%, among a series of measures.

In Jerusalem, several dozen demonstrators marched toward the Prime Minister’s Residence in the city’s upscale Rehavia neighborhood, their shouts of protest echoing through the streets. “The gas belongs to everyone,” they chanted, referring to recent natural gas finds worth almost NIS 1 trillion ($280 billion) that are largely slated for export. Some held up signs calling for an end to preferential treatment for tycoons, while others waved flags bearing the names of socially oriented opposition parties such as Labor and Meretz, as well as the red flag of the joint Arab-Jewish Da’am Workers Party.

“We are all in the opposition,” they cried.

“Things could be better here,” shouted one of the speakers at the central rally in the capital’s Paris Square.

“It isn’t this torch that will light our way,” read a sign, punning on Lapid‘s last name — the Hebrew word for “torch.”

Much of the criticism hinges on the decision to opt for across-the-board tax hikes and cuts to services while forgoing some measures that could bolster the state coffers without worsening the plight of the middle and lower classes. Among the proposed measures that the treasury chose to pass over was an inheritance tax, differential value-added tax rates, and a higher levy on income from investments.

In a rare show of secular-ultra-Orthodox solidarity, men in black hats stood side by side with secular women and even children.

Secular and ultra-Orthodox residents of Jerusalem stand side by side at a protest in Jerusalem against the impending budget cuts proposed by Finance Minister Yair Lapid, Saturday. (photo credit: Yifa Yaakov/The Times of Israel)
Secular and ultra-Orthodox residents of Jerusalem stand side by side at a protest in Jerusalem against the impending budget cuts proposed by Finance Minister Yair Lapid, Saturday. (photo credit: Yifa Yaakov/The Times of Israel)

In Haifa, dozens marched toward the Yesh Atid headquarters, blocking sections of the road on Sderot Moriya street.

“Instead of a murderous budget that raises the VAT and income tax — which takes from the workers, from the self-employed, from the housewives and the elderly — the people demand that the flow of gifts to tycoons be stopped, that our natural resources be returned to us, and that money not be wasted on isolated settlements. The money must be funneled to the children and elderly, to our welfare and housing in Israel,” read a statement by the Tel Aviv protest organizers on the event’s Facebook page.

The Jerusalem protest organizers were no less vehement.

“Those who lied to us at the polling booths will see and hear us in the streets. We will speak our minds about the new financial decrees of the finance minister and prime minister, who perpetuate the failed economic policy of old,” they wrote. “The grace period is ending. We won’t let another budget pass us by.”

Protest leader-turned-Labor MK StavShaffir posted information about the demonstrations on her Facebook page on Saturday afternoon, calling on the Israeli public to join. “We demand a fair budget, see you there,” she wrote, voicing hopes that Lapid would change his mind about the cuts.

Another protest leader, Daphne Leef, wrote that protesting was a “civic obligation” as important as voting.

“Don’t just accept the situation,” she implored. “Today at 9 p.m. I will go to Habima Square. I will go there to march along with you. I will go there filled with rage over the exploitation of the people of this country, those who respect the law, those who pay taxes, those who only want to live with dignity, with integrity, who work hard, who still believe values are of the utmost importance.”

Lapid, meanwhile, sent an apologetic email to his supporters Saturday in which he explained the reasoning behind his budget proposal. He stressed that the proposal wasn’t set in stone and that some clauses had been changed or deleted, such as a clause concerning participation in the cost of treatments covered by an individual’s health plan. 

“The budget we will present to the government this week is vital to saving the Israeli economy. Yet the winds outside are fierce and the tone is accusatory,” the email began.

Addressing allegations that his proposal would hurt his middle-class constituents and deliver yet more hardship to those to whom he’d promised an improvement, he wrote, “These are fair questions that I would like to answer.” The budget cuts, he continued, were “just the first step,” which would quickly pass, followed by economic reforms that would lower the cost of living and “improve the life of the working man.”

Demonstrators wave opposition party flags at a protest against budget cuts in Jerusalem. (photo credit: Yifa Yaakov/The Times of Israel)
Demonstrators wave opposition party flags at a protest against budget cuts in Jerusalem. (photo credit: Yifa Yaakov/The Times of Israel)

Lapid stressed that his proposal did not target the middle class specifically, but rather, “for the first time in years,” divides the burden in a just way among the various sectors of society, such as the ultra-Orthodox who, he said, were previously “politically immune,” and the country’s indebted magnates.

“So yes, the middle class is hurt, I don’t deny that for a minute, but at least this time it’s not the only class whose pockets are targeted,” Lapid said. He urged the public to exercise patience and wait for the reforms that would improve the people’s lives.

“I’ve been finance minister for a month and a half, during which I had to prepare a budget to close a monstrous deficit of NIS 35 billion. But even in the current budget we have created a string of programs that will fundamentally transform the economy. There will be a revolution in housing, in the job market, in the high costs of living. Can all this be accomplished in six weeks? Of course not,” he continued, likening the budget cuts to “an emergency maneuver to stop the bleeding.”

The finance minister said the major changes he had promised would come to pass “much sooner than what everybody thinks,” adding that a year down the line the changes would be apparent everywhere.

But for now, he said, there was “obviously” no other choice. “If we had not taken all these stabilizing measures now, our credit rating would have dropped. The problem is that the words ‘credit rating’ sound very boring to people… if our credit rating is lowered to the level it was at 10 years ago, we will have to pay a much higher interest on our national debt, and then we will have to double the cuts.”

The bottom line, he said, was that Israel’s situation would improve because its financial standing was good. Its economy was growing and unemployment was low. “We’ll shrink a little now, and then we’ll be able to expand, and obviously we’ll start giving back to the people — it’s their money, after all,” Lapid said.

Lapid presented his budget proposal to President Shimon Peres on Thursday, expressing confidence that the measures would help Israel close its expanding deficit “relatively quickly, because we are an economically healthy country.”

On Wednesday, Prime Minister Benjamin Netanyahu voiced his support for the outline, which was largely based on a proposal he and then-finance minister YuvalSteinitz drew up in 2012 but didn’t succeed in passing.

Amid the public discourse on the budget, a Channel 2 poll last week found that 42% of the voting public ranked Lapid’s performance as finance minister as poor, with 52% ranking him as good or mediocre, and with the remaining respondents offering no opinion.

When asked if appointing the freshman politician to the role was a mistake, 50% said yes. While 47% of Yesh Atid voters said they would still vote for Lapid if the elections were held today, 28% said they would vote for somebody else, with 28% saying they don’t know.

The survey, conducted by Shiluv Millward Brown research institute, polled 400 adults. The survey had a 4.9% margin of error.

Asher Zeiger contributed to this report.

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