In what may signal Prime Minister Benjamin Netanyahu’s first coalition crisis, Economy Minister Aryeh Deri threatened to leave the newly formed government Monday if the Finance Ministry did not include the so-called zero-VAT law in the 2015/16 budget.
Deri’s warning came in response to reports that Finance Minister Moshe Kahlon intended to drop the plan, which would cancel the value-added sales tax on basic staples.
Deri’s ultra-Orthodox Shas party, which included the zero-VAT tax policy in its recent coalition agreement with Netanyahu’s Likud, said that if the Finance Ministry reneged on implementing the plan, it would leave the newly formed government.
During a Shas faction meeting Monday afternoon, Deri called the potential move a “serious breach of the [coalition] agreement so severe that it could affect the wholeness of this government.
“I read recent reports in the press, so I’m responding immediately to clear up this issue… We will adhere to our commitments and I expect them to adhere to theirs,” Deri said.
Shas officials said Netanyahu had personally assured Deri last month that the tax-reduction legislation would be implemented.
The financial daily Globes reported Monday that Finance Minister Moshe Kahlon was recently told by senior ministry officials that implementing a zero-percent VAT on properties, inheritances and basic goods was unfeasible.
Deri’s threat to the wholeness of the government refers to the fact that in a 61-strong coalition, even one resignation could cause the government to collapse.