Netanyahu scales back defense cuts, promises budget will pass today

Ahead of Cabinet debate, prime minister backs NIS 3 billion ($840 million) reduction in military spending, not the expected NIS 4 billion ($1.12 billion)

Stuart Winer is a breaking news editor at The Times of Israel.

The weekly Cabinet meeting, April 28, 2013 (photo credit: Alex Kolomoisky/Pool/Flash90)
The weekly Cabinet meeting, April 28, 2013 (photo credit: Alex Kolomoisky/Pool/Flash90)

Prime Minister Benjamin Netanyahu announced that a much-contested cut in the defense budget will be NIS 1 billion smaller than initially predicted, but the difference will not be made up from even deeper cuts in other ministries.

Speaking at the start of a Cabinet meeting Monday morning, Netanyahu said that meetings late into Sunday night with defense officials produced a figure of NIS 3 billion ($840 million) to be cut from defense, and not the NIS 4 billion ($1.12 billion) that the government had originally asked for. The Defense Ministry had balked at the possibility of a NIS 4-billion cut, and had ideally been seeking increased funding to help finance defenses against growing threats stemming from regional instability.

“I believe the budget that I am proposing today finds the right balance between the needs of the economy and the needs of defense,” the prime minister said. “The most important thing is that the government passes the budget today. This decision about the defense budget will enable us to pass the budget. The state of Israel will have a budget by the end of the day.”

The Cabinet was set to debate and vote on the budget on Monday before it was to be put to a parliamentary vote.

The prime minister said that the scaled-down defense cuts will be absorbed by using budget reserves from previous years and that other ministries will not be further cut and the public will not be required to foot the bill.

Netanyahu spoke of the increasing need for Israel to have not just the capability to attack, but also to defend; he said that, while the IDF must find ways to be more efficient, there is also a need to equip the army with additional Iron Dome missile defense systems.

Opposition leader Shelly Yachimovich appealed to government ministers that they not not pass the draft budget, which she claimed would be a blow to the lower classes and the economy.

“Be brave and vote against the pile of decrees, the cuts and subjagation in the Finance Minister’s plan,” she wrote.

Yachimovich detailed the harm she predicted the budget would do to the lower and middle classes and the danger of the economy going into a recession.

“The damage from hasty decisions to the citizens of Israel, to the economy and its fate, is unbearably hard.”

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, 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’s budget proposal 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.

Chairman of the Knesset Finance Committee MK Nissan Slomiansky (Jewish Home) said that he hopes the income-tax hike will not be approved; he suggested increased taxation on large companies instead, according to a report from Israel Radio. Slomiansky said that he suggested alternatives to Finance Minister Yair Lapid, but they were rejected.

Most Popular
read more: