Liberman to bring budget to cabinet in August, seeks hike in home property tax

Finance minister says he hopes for 5% annual economic growth in next 4 years, budget deficit target of 7.1% of GDP for 2021 is reachable

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Finance Minister Avigdor Liberman at a press briefing with journalists in Jerusalem (Shoshanna Solomon/Times of Israel)
Finance Minister Avigdor Liberman at a press briefing with journalists in Jerusalem (Shoshanna Solomon/Times of Israel)

Finance Minister Avigdor Liberman on Tuesday said that he will present the 2021-2022 state budget for a cabinet vote in the first week of August, with the aim of having the Knesset pass it by the November deadline.

Liberman said he believes the budget will pass by November because even most of the opposition does not want a fresh round of elections, which would be triggered if the budget failed to pass. Israel held four elections within two years amid political gridlock. The last budget that was passed, for 2019, was voted upon in March 2018.

At a briefing with reporters in Jerusalem, Liberman, who took up his post when a government was formed in June, reiterated his assertion that the upcoming budget will not raise taxes but rather would see growth come from a reduction in regulations, investment in infrastructure and greater economic efficiency.

He said that just cutting back on regulation, according to OECD forecasts, could lead to a savings of NIS 8 billion ($2.43 billion) to NIS 8.5 billion ($2.6 billion) a year. As soon as the provisions come into force, he said, they will contribute to significant economic growth.

“My dream for the four coming years is to preserve (annual) growth at around 5%. That would be an unprecedented achievement,” Liberman said.

“I haven’t come to please anyone,” he declared. “My commitment is to the Israeli economy and I am prepared to pay the price. We will do what is right for the Israeli economy even if it is not popular.”

The budget will include an estimate of the government deficit, but the target hasn’t been set yet, Liberman said. The budget deficit, which ballooned to 11.6% of GDP in 2020 because of the coronavirus crisis as the government doled out money to keep the economy afloat amid the lockdowns, was 10.1% of GDP in June. The Bank of Israel has forecast that the 2021 deficit will be 7.1% of GDP — a target that Liberman agreed with, calling it “not excessively optimistic.”

Liberman said that among the steps proposed in the economic plan that will accompany the budget is to raise property taxes for residential properties and lower them for commercial properties and businesses, so that municipalities will encourage the development of homes as opposed to businesses. This would increase the supply of residential properties and help lower ballooning house prices.

He also said he supports raising the retirement age for women.

Liberman said that his steps to slash daycare subsidies for ultra-Orthodox families in which the father studies Torah full-time are intended to get them into the workforce, even if the plan raised the ire of Haredim.

Similar subsidy cuts  in 2003, when Benjamin Netanyahu was finance minister, and in 2013, when Yair Lapid was finance minister, triggered a 70% jump Haredi participation in the workforce, he said.

The steps, Liberman said, are intended to “help them and not to hurt them,” he said. It is the Shas and United Torah Judaism parties that are hurting their constituencies by leaving them without income and education, and keeping them dependent on handouts.

They are thus then a “captive audience, which can then be dictated to about whom to vote in the elections,” he said.

The aim of the steps he is proposing, Liberman said, is to lift the Haredim out of poverty. Depriving them of the educational basics of English and math “leaves them with no other option other than the kollels,” he said, referring to the Torah study halls for married men, most of which offer a small stipend.

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