Trajtenberg committee members told "Globes" that they are proposing to increase the deficit in 2013. Committee members said that page 244 of the report includes a paragraph about fiscal policy, which clearly states, "Staying within the expenditure according to overall expenditure also in the coming years, as the committee has recommended, is inconsistent with most of the current growth scenarios, in terms of the deficit ceiling, even after cancelling the tax cuts proposal. It is possible that the government will be required to make a decision on this issue when it prepares the 2013 budget."
The committee is basically saying that the impending economic crisis will harm growth, including revenue from taxes, which will obligate the government, by 2013, to decide between reducing expenditure, increasing the deficit, or raising taxes. Committee members told "Globes" that they explicitly recommend increasing expenditure, which leaves the government two options: increase the deficit or raise taxes.
Given that the government is already implementing far-reaching changes in taxation for 2012, the probability that additional changes will be made is very low, though possible. Therefore, the Trajtenberg committee recommends increasing the target deficit by only 1.5% GDP (NIS 16 billion), which is a very low deficit.
"It is not relevant to give specific numbers since everything depends on economic growth and the state's tax revenues. It is superfluous to make projections for 2013 with all the changes going on in the world now, but it is clear that, as things appear now, when the government prepares the 2013 budget, it will have to decide between increasing the deficit and lowering public expenditure," a senior committee member said.
Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2011
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