Kahlon agrees budget with haredi parties

Moshe Kahlon
Moshe Kahlon

Instead of granting a NIS 170 child allowance, it will be NIS 120, while NIS 50 will be deposited per child as a savings fund.

After many delays and postponements, the cabinet meeting to approve the state budget for 2015-2016 will take place next Sunday.

After Deputy Minister of Health MK Yakov Litzman yesterday accepted the Ministry of Finance plan as an alternative to the retroactive child allowances promised to United Torah Judaism in the coalition agreements, the state will open a savings fund for children up to age 18, thereby solving the problem that has been delaying the approval of the budget.

The proposal still requires approval of the Agudat Israel Council of Torah Sages, but approval is probable, because the amount demanded by Litzman will be paid in full, although the payment schedule is different. Under the agreement with the Ministry of Finance, instead of granting a NIS 170 child allowance, the allowance will be NIS 120, while NIS 50 will be deposited for each child as a savings fund. For Litzman, this is the same as what he demanded, while the Ministry of Finance benefits from the slower payment schedule. At the same time, according to the understandings with the Ministry of Finance, payments to yeshivas (Jewish religious schools) will be made retroactive to May 2015.

The consent of Litzman and the Council of Torah Sages will make it possible to go ahead with the budget approval procedures, and bring the budget to a cabinet vote next week. The bureaucratic procedures accompanying the submission of a cabinet bill, however, and the wish to give the ministers time to study the budget bill before voting on it, will delay approval of the budget until next Thursday.

Under the timetable dictated by the Budget Law, the budget is due to be presented to the Knesset by August 31, and to pass its first reading on September 2. The deadline for the second and third readings of the bill is November 19; if the budget is not approved by then, the government will fall.

The compromise with Litzman means that annualized payments amounting to NIS 2.6 billion will be postponed. The budget problem, however, is merely being postponed until 2017, because the obligation to pay the amount retroactively to the date on which the government was formed has not changed.

Under the agreement, the Ministry of Finance will pay NIS 50 of the increase child allowance into a long-term deposit in the child's name. The child can withdraw the deposit when he reaches age 18 under certain conditions, or at age 21 with no restrictions. An actuarial calculation shows that a NIS 50 deposit per month from the date of birth until age 18 will amount to NIS 20,000-30,000 by the time it is withdrawn, assuming that the interest rate remains at its current level.

At this stage, it is not yet clear whether the deposit will be managed by the banks or a National Insurance Institute fund, like the fund for demobilized soldiers. If the banks manage the deposits, the Ministry of Finance will have to conduct a tender, and the deposits will not be expected to actually begin before 2017.

The background to the agreements with the Ministry of Finance is a quarrel between Litzman and Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism), leader of a different faction within the United Torah Judaism party. Prime Minister Benjamin Netanyahu and Minister of Finance Moshe Kahlon briefed Gafni on the agreement yesterday and today.

Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Moshe Kahlon
Moshe Kahlon
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