With the cabinet preparing Wednesday morning to vote on the budget for 2015-2016, it remained unclear whether Economy Minister Areyh Deri would support the plan or instruct his Shas party’s ministers to vote against it, amid a dispute over his demand that taxes be eased for lower-income households.
The cabinet was set to begin a meeting on approving the budget in the morning, although the debate was expected to continue for hours throughout the day and possibly into the night.
Reports late Tuesday suggested that Deri, who has insisted on the removal of value-added tax from basic household items, had reached an agreement with Finance Minister Moshe Kahlon on a compromise plan that would see a fixed reduction of 15-20 percent in the water and electricity bills of the lowest 3-4% income bracket, in addition to a reduction in public transportation tariffs.
However, by the following morning Shas appeared poised to reject the budget, with Deri’s adviser Itzik Alrov denying to Army Radio that there was any deal with the treasury.
“There is still no agreement between Deri and Kahlon,” he said. “As it stands, Deri will vote against the budget.”
The demand for removing VAT from basic items, along with increasing the minimum wage, were key Shas conditions when the party signed on to join Prime Minister Benjamin Netanyahu’s governing coalition.
It also remained unclear whether Education Minister Naftali Bennett would support the budget, which could slash up to NIS 1 billion ($260 million) from his ministry’s funding. Sources in Bennett’s Jewish Home party said negotiations with the treasury have so far failed to fully satisfy the minister.
As he worked to assuage cabinet members, Kahlon struck an agreement with Welfare Minister Haim Katz who had demanded an additional NIS 2 billion for his ministry. According to Hebrew media reports, Katz eventually secured half that amount, NIS 1 billion, for welfare issues.
The biggest challenge remains the Defense Ministry, where there is gap of some NIS 5 billion between what defense officials are demanding and what Kahlon is prepared to allocate, reports said.
Despite the objections, the budget is expected to pass the cabinet vote and make its way to the Knesset floor, as there is a majority of ministers in favor of the plan.