When the announcement was made that Yair Lapid (Yesh Atid) will serve as Israel’s next minister of finance, many Lapid loyalists were quick to visit his Facebook page to warn him not to fall into the trap. They explained to him that as finance minister, he will be the government’s “hangman” as opposition leader Shelly Yacimovich put it when she was offered the post.
Shortly after taking the oath of office on Monday, 7 Nissan 5773, Lapid postponed a meeting set for Tuesday 8 Nissan during which the 2013-2014 biennial state budget was to be discussed. Lapid wants to study the nation’s current fiscal picture, indicating he may opt to return to the annual budget instead of a biennial one.
Whatever the case, Minister of Finance Lapid has 135 days to cut 30 billion NIS in government spending. 2012 left a 39 billion NIS hole in the state coffer and according to Bank of Israel estimates, the national deficit will increase to 49 billion NIS in 2013, possibly even to 59 billion NIS.
During his election campaign, Lapid’s voice was audible as he called for cutting government spending and reducing the deficit. He began by making his inclusion in the coalition contingent on a reduction in the number of cabinet ministers.
One of his major decisions will have to surround how he will address the national economy. Will he decide that a major cut in government spending will be sufficient, or will he opt to increase the value added tax from 17% to 18%? There is also the matter of taxation for the wealthy, tax on beer and cigarettes, and a tax increase for those earning over 14,400 NIS ($3,902) monthly.
Lapid announced he will lower the cost of basic goods, lower the cost of gasoline and electricity, as well as water. Now he is likely to see that saying it and implementing such a reality may be two entirely different matters. As he works to lower electric costs, there is a schedule 6% electricity price hike going into effect after Pesach in addition to a 2.4% increase in water prices.
The treasury suggested cutting 1 billion NIS in the nation’s health budget as the nation’s kupot cholim (HMOs) and hospitals are in the red. This too will have to be addressed by the new minister. There is talk of increasing the health tax by 0.5%.
(YWN – Israel Desk, Jerusalem)
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4 Responses
In the words of the great American Rush Limbaugh…
“I HOPE HE FAILS!!”
Lapid will have to navigate the economy of Israel through some very turbulent waters. Let us all wish him every success.
He will be beloved by the economic conservatives (Yesh Atid, Livni, and most but not all in Likud and Bayit Yehudi). He’s an anti-welfare state, pro-markets type, similar to American Republicans.
He will be detested by the Hareidim (especially Shas), Socialists, and Arabs — all of whom share support of and benefit from a welfare state.
No one likes to give up on freebies.
There is no way for a country to survive without tightening its belt and hard times are ahead.