BICOM

Cuts in Israel’s defence budget and increases in taxes should pay for housing and education reforms aimed at meeting the demands of this summer’s social protests, a committee established by Prime Minister Benjamin Netanyahu has recommended. The panel, chaired by Prof Manuel Trajtenberg, one of Israel’s leading economists, presented its findings yesterday after being given a mandate to find “economically sound” ways to reduce the cost of living without breaching the budget framework.

The 267-page report outlined a number of changes in four areas, including housing, social services, competition and the cost of living and taxation. Among the committee’s main recommendations were free education from the age three, massive building of new homes, tax breaks for working couples and reducing customs duties on imports.

In order to pay for this social package, the report recommended taxes be increased for the top wage earners. However, Prof Trajtenberg noted that Israel’s social security was as important as its physical security, and that the main source of revenue would come from cuts in the defence budget. In total, the report called for cuts of 3 billion NIS from the basic defence budget of 2011 and 2012.  

The Defence Ministry is emphatically opposed to the cuts, arguing that Israel is facing unprecedented challenges, including an Iranian nuclear threat, uncertainty with the Palestinians in the West Bank, regime change in Egypt and the Syrian uprising. The IDF, Defence Ministry officials argue, has to be ready for any eventuality and this is not the time for cuts. Defence minister Ehud Barak said life itself took precedence over the quality of life. “An investment in Israel’s security is an insurance policy. There is no possibility to implement these cuts without exposing Israeli citizens to danger.”

Netanyahu, however, has defended the committee’s recommendation for defence budget cuts. “The security of Israel’s citizens is the top priority of my government. The defence budget remains the biggest among all government ministries. Nonetheless, efficiency and transparency in the defence establishment are two important components which will help improve the welfare of Israel’s citizens.”