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Cabinet approves budget despite sharp Bank of Israel criticism
Israel’s cabinet yesterday approved the 2015 budget after protracted negotiations. However, some cabinet members expressed dissatisfaction with elements of the budget, which was also criticised yesterday by the Bank of Israel.
The process of cabinet and Knesset approval for the annual budget is months behind schedule due to Operation Protective Edge. Factoring in the significant cost of the campaign was a sharp point of contention between Lapid and Prime Minister Benjamin Netanyahu, who only recently agreed on the details of the 2015 budget. Lapid vehemently opposed increasing taxes, as favoured by Netanyahu, with the middle-class forming the base of his Yesh Atid party’s support. Instead, they eventually agreed on an increased deficit of 3.4 per cent. The budget is also set to increase the defence and some social budgets and will include Lapid’s flagship legislation to scrap VAT for many first-time home buyers.
At the start of yesterday’s cabinet meeting, Lapid called his draft “a responsible budget.” It was approved by all cabinet members other than Hatnuah’s Environment Minister Amir Peretz, who called it “a political budget, and not a social one.” Meanwhile, Jewish Home’s Housing Minister Uri Ariel expressed reservations, saying that the budget “isn’t serious enough” and is missing essential details. He pointed out that the ministries which will see an increase in funds, Health, Education and Welfare are all headed by ministers from Lapid’s Yesh Atid party.
Unusually, the Bank of Israel also criticised the proposed budget yesterday, publishing a position paper which argued that the deficit will add up to 3.6 per cent of GDP, not the 3.4 per cent as planned. The paper said that the Finance Ministry has over-estimated tax revenues in its calculations.
The budget will now be submitted to the Knesset for approval, which must be secured by the end of the year. In an indication that opposition MKs are likely to fiercely oppose the budget, Meretz MK Ilan Gilon yesterday described it as a budget “of tricksters and real-estate pimps.”