The Finance Ministry is proposing wide-ranging cuts for the 2019 budget that are likely to see Israel’s diplomatic staff and embassies dramatically slashed amid a raft of cost-cutting measures that will also see new immigrants and VAT refunds for tourists targeted.
Government expenditure is planned to increase by just under 3.5 percent from NIS 460 billion ($134 billion) in 2018 to NIS 479 billion ($140 billion) in 2019, with NIS 100 billion ($29 billion) being set aside to pay off debts, according to a document circulated to ministers Monday in advance of a government budget debate set to start Thursday.
The most dramatic element was the plan to slash Israel’s Foreign Ministry funding, a move that would see Israel shut down a fifth of its foreign missions and cut a third of its staff.
The Finance Ministry document proposed cutting 22 Israeli missions overseas over three years, at a saving of NIS 176 million ($51 million), and eliminating 140 out of 686 of the Jerusalem-based staff at the Foreign Ministry’s Headquarters over four years, for a saving of NIS 40 million ($11.6 million).
Israel currently has 69 embassies, 23 consulates and five special missions, including its representative at the United Nations.
Israel’s deputy foreign minister Tzipi Hotovely called the move a “targeted assassination” of Israeli diplomacy.
“This is an outrage that we can’t let pass. The Finance Ministry has decided to carry out a targeted assassination of the foreign service, and at a time when Israel is expanding its foreign relations and the ministry needs an expanded budget,” she said, vowing to meeting with Prime Minister Benjamin Netanyahu, who is also foreign minister, to “prevent this impossible decree.”
Netanyahu has been touting Israel’s increasingly good diplomatic ties around the world and last month promised to open a new Israeli embassy in Rwanda.
The move comes after the Finance Ministry last year agreed new wage deals with the Foreign Ministry, which has seen its budget and conditions systematically eroded over the last decade. The diplomats went on a full-scale strike in 2014 and again last year after the treasury held up implementing the 2014 agreement.
The budget also targeted education and the handicapped.
The biggest recipients in 2019 will be the Education Ministry, with a budget of NIS 57 billion ($16.5 billion), followed by the Defense Ministry, with NIS 55 billion ($16 million). The Health Ministry will get NIS 36 billion ($10.5 billion).
The Finance Ministry again proposed postponing countrywide implementation of a long school day — this time for four years — so as not to have to spend NIS 1.2 billion ($348 million) in 2019 and a further NIS 2.4 billion ($700 million) in 2020. Today, the program is implemented in weak socioeconomic areas only. The move has now been delayed for 20 years.
The ministry also called for a three-year delay in the full implementation of a 1998 law obligating all public buildings to be handicapped-accessible because the program is behind schedule.
The various proposed cuts and postponements are intended to provide cash for new initiatives to which the government has committed itself, such as an increase in monthly benefits to the disabled and to elderly people receiving nursing care, and the awarding of negative tax credits for working people on low pay to increase their in-pocket income.
It also funds an expansion of subsidies for after-school activities within the framework of Finance Minister Moshe Kahlon’s “Net for the Family” initiative, a NIS 4 billion ($1.1 billion) a year package which also includes additional tax credits for working parents of children up to age 6, higher income supplements for low-income earners, equalization of tax credits for working fathers and mothers, and tax cuts on cellphones and children’s clothes and shoes.
If the budget proposals are approved, NIS 130 million will be cut from the benefits given to new immigrants and means testing will be carried out to ensure that only newcomers whose total wealth is less than NIS 500,000 ($145,000) will receive financial assistance.
A further NIS 40 million ($11.6 million) will be saved by refunding only 60 percent of VAT on goods that tourists buy in Israel and take overseas. Today, visitors receive a full refund. The ministry says the worldwide average is a 54% VAT return.
The sum of NIS 1.2 billion ($350 million) will be taken from the Israel Airports Authority’s profits and an annual NIS 300 million ($870 million) will be taken each year going forward from the IAA’s earnings on flight fees and other commercial activities.
NIS 30 million ($8.7 million) is to be cut from the Education Ministry’s training budget, with 90% of this sum transferred to principals to allow them to purchase services independently, and NIS 12 million ($3.5 million) — 20% of the whole budget — is to be shaved off funds earmarked for Torah and Judaism-related educational activities. A savings of NIS 11 million ($3.3 million) is proposed through cancellation of the Religious Affairs Minister’s discretionary “reserve fund” and combination of the Religious Affairs Ministry and the Chief Rabbinate.
Other measures proposed include cutting overtime hours for public workers, excluding hospital staff, by 30 percent to save NIS 200 million ($58,000,000) a year, trimming NIS 10 million ($2.9 million) off the settlement department’s budget, implementing a 30% cut in the budget for national ceremonies (saving NIS 5 million, or $1.45 million per year), and imposing further cuts on a ten-year, originally NIS 140 million ($40.7 million) a year program announced in 2011 to encourage alternative energy solutions to fossil fuels. This program has been cut each year and the Finance Ministry proposes halving the already reduced figure of NIS 170 million that was due to be spent in 2019 and 2020.