Knesset passes 2013-14 budget in first reading

The Knesset on Monday night voted through, in first reading, the 2013-2014 state budget with a vote tally of 58 for and 44 against.

The bill will now go to the Knesset’s Finance Committee, where it is expected to face an uphill battle and many changes, ahead of second and third readings in the plenum.

The accompanying Economic Arrangements Bill also passed its first reading.

“I congratulate my fellow MKs on passing the budget in first reading. Tonight we made another step towards the change that will produce a fairer society,” said Finance Minister Yair Lapid after the vote.

Parrying heckles during his presentation of the bill before parliament, Lapid said, “The budget’s objective is extricating the economy from deficit. We can’t allow the situation to continue as is. If it weren’t for us, the deficit would have grown. We chose to do the responsible thing,” Lapid said.

Defending his budget against claims that it further impoverished the lower classes, Lapid said “they are not invisible to us,” but that “the thing the lower classes need most is a strong country with a strong economy.”

Last month, the Finance Ministry approved a series of austerity measures aimed at cutting 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 cuts in defense, 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 treasury’s budget proposal also increased income tax by 1.5% across the board, and boosted corporate tax to 26%. The Knesset already approved raising the value added tax from 17% to 18% at the end of May.

The budget also includes a NIS 9 billion ($2.5 billion) increase to the Education Ministry and a NIS 3 billion ($834 million) boost to the Health Ministry, as well as funds dedicated to increasing ultra-Orthodox employment.

Opposition leader Shelly Yachimovich (Labor Party) took the podium after Lapid and denounced the governing coalition’s budget as “an organized attack by [Prime Minister Benjamin] Netanyahu and Lapid on the Israeli majority.” She compared the battle over the budget to a civil war and charged that the government “declared war on 99% of Israelis” with the proposed budget.

She charged that Netanyahu and Lapid were out of touch with ordinary Israelis and called on dissenting members of the government to join the opposition.

Lapid parried by attacking Yachimovich for evading responsibility. “You could have stood here in my place and presented a budget of your own,” said Lapid. “You escaped taking responsibility because it is much easier to stand on the sidelines and pass criticism.”

The Labor party had refused Netanyahu’s offers to join the coalition as finance minister following January elections.

Shas leader Aryeh Deri also attacked Lapid, mocking the Yesh Atid leader’s campaign slogan “Where is the money?” by asking him “Where is your shame?”

“50,000 children will join the 800,000 children already afflicted by poverty because of this budget. Every MK must take responsibility for his vote today,” said Deri.

Hatnuah MK Amram Mitzna said the government had to deal with an “impossible deficit,” adding that there was no one in the coalition that was “in love” with the proposed budget.

“The current government inherited a deficit of NIS 40 million because of irresponsible actions. The question is where we retrieve that money from. It is easy for the opposition parties to yell, but they need to propose where to get the money from,” said Jewish Home MK Ayelet Shaked.