The cabinet today approved the proposal by Minister of Finance Yair Lapid to cancel the income tax hike, scheduled for January 1, 2014. The measure will cost NIS 3.3 billion a year in tax revenues. To maintain fiscal discipline and the deficit target, the cabinet reduced the spending cap increase for 2014 by the same amount: interest expenses will be cut by NIS 2 billion and reserves for meeting the deficit target will be cut by NIS 1.3 billion.
The Ministry of Finance presented the cabinet economic data for 2013 and projections for 2014. For 2013, the ministry projects 3.6% GDP growth, NIS 303 billion in expenditures, NIS 271.6 billion in tax and other revenues, a deficit of NIS 31.4 billion or 3% of GDP, and a deficit of 4.3% of GDP on the basis of the budget plan. The deficits are based on the new methodology.
For 2014, the Ministry of Finance projects 3.1% GDP growth, NIS 315.3 billion in expenditures, NIS 281.6 billion in tax and other revenues, a deficit of NIS 33.7 billion or 3% of GDP, and a deficit of 2.8% of GDP on the basis of the budget plan.
The cabinet decided to allot NIS 100 million from the 2014 adjustments budget for dealing with migrant workers.
Lapid said, "The government must work harder for the sake of the middle class. The responsible thing is not only to raise taxes when there is no choice, but also to cut taxes and create growth when the situation improves."
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2013
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