The State of Israel budget for 2015-2016 was approved late last night in its first reading in the Knesset by a slim majority of 57 to 53. Minister of the Economy and Shas chairman Arye Deri abstained in the vote, after pairing with Yisrael Beytenu chairman Avigdor Liberman.
Earlier in the evening, Deri had convened a meeting of his party faction at the ministry of the economy in Jerusalem. A senior Shas source explained that the party's MKs told Deri that they were angry that Finance Minister Moshe Kahlon had not agreed to 0% VAT for basic commodities, even though the plan had been agreed in the cabinet discussions on the budget. Deri instructed the Shas MKs to vote in favor of the budget in the first reading in the Knesset and if no agreement can be reached about 0% VAT to help the disadvantaged by the second and third readings, the Shas party would not support the budget.
Kahlon said, "After 100 days of intensive work, I'm glad that we've reached the final stretch. In the budget we have submitted, there are changes from those put together by the previous government. In my eyes the budget is not only about accounting but also values and world outlook. It should have a social aspect. Behind the numbers and clauses there are people, concern for their education and health, and improving their lives. This is a budget that brings in new priorities."
He added, "I'm not naïve. The opposition will attack the budget because that's their job. But it's many years since we've seen a budget like this. No tax hikes or budget cuts, nothing that burdens people. This is a budget that serves society and it won't be society serving the budget."
Kahlon continued, "We see a global economic storm and the growth figures in Israel are not encouraging, and in this budget we have taken drastic steps to encourage growth. On the other hand, state revenues are good and in the past few months we see surplus collection. Something doesn't add up and we are checking it out but it's important that the finance minister tells you the truth that there is a significant tax surplus, and if we are sure about that it will benefit the citizens of Israel. We are presenting reforms that the economy has waited years for."
"Regarding the Locker Committee on the defense budget, I think the conclusions are important and most of them must be implemented. I believe every major change must be achieved through dialogue.
Kahlon mocked the Bank of Israel by saying, "Only yesterday I heard about the new wind blowing through the Bank of Israel. I'm happy that they have finally seen the light." He was referring to comments by the new Supervisor of Banks Hedva Ber that she supported splitting off the credit card companies from the major banks.
Kahlon elegantly evaded talking about the defense budget in which a budgetary addition has yet to be agreed although it is clear it will be worth billions of shekels. He said, "Any increase in the budget will be at the expense of the public. We have met all the commitments that we promised the public. We added NIS 6.5 billion to education. Over two years we have added NIS 5.9 billion to the health budget. We have added NIS 800,000 to welfare and NIS 600 million for supplementary payments to the elderly. And we have brought major good news to the boys and girls serving in the IDF with a historic rise in the money paid to those performing their compulsory national service. This even though soldiers have no political party or lobbyists. For the first time the self-employed will be entitled to unemployment pay. NIS 500 million has been added for assistant teachers in kindergartens and we have raised child allowance payments.
Opposition leader Isaac Herzog said, "There is no good news in this budget. This is a budget of panic which lacks balance and does not care about a young student who has finished studying in Karmiel and is looking for work. The budget has forgotten the working family living in Kiryat Gat that cannot make ends meet. The budget does not encourage employment or growth and does nothing to help industry. There is no good news for working people and it offers no direction or hope."
Published by Globes [online], Israel business news - www.globes-online.com - on September 3, 2015
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