Government ministers were due to start general discussion of the state budget today - outlining revenues, expenditure and deficit - but it looks as though they will not reach this stage of the meeting because they have not managed to come to agreement over spending cuts, Galei Tsahal (Israel Army Radio) reports.
The spending cuts are expected to be in the billions of shekels, some coming from an across-the-board cut for all ministries, and some from reductions in items specified in the coalition agreements, which amount to some NIS 8 billion. The coalition party leaders, however, are not prepared to cut back what was agreed, and because of this the budget does not add up.
On the face of it, the budget has grown; it grows by billions annually. But commitments of the previous government together with the coalition agreements of the present government far exceed permitted spending limits, even on the assumption that the budget deficit rises above what was originally planned.
The main problem at present is the rise in child allowances promised in the coalition agreements, which Minister of Finance Moshe Kahlon is demanding should be spread over several years. Minister of the Economy Aryeh Deri's proposal for a zero VAT rate on basic items is also problematic. The committee that is meant to deal with this matter has not yet been set up, and so it is quite possible that it will be fudged somehow. Deri, however, insists that zero VAT should be part of the budget, and has sent a letter on the matter to Kahlon.
Criticism has been voiced in the coalition of the minister of finance's handling of the budget, but fingers are also being pointed at Prime Minister Benjamin Netanyahu, who knew what the budget situation was and the limitations that existed, and yet signed the coalition agreements. Ministry of Finance officials told Galei Tsahal that the prime minister had all the figures in front of him, but he still signed the agreements.
Kahlon meanwhile has three items on which he insists: raising old age allowances, unemployment benefits for the self-employed, and higher pay for military draftees, or a higher demobilization grant. No-one appears to want to break up the government just after it was formed, but it looks as though the budget battles will be tough.
Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2015
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