Mon, July 30, 2012
JERUSALEM, July 30 (Xinhua) -- Israeli ministers are set to approve Monday an austerity plan, which includes tax hikes and budget cuts, as part of the efforts to curb Israel's burgeoning 2012 deficit.
According to Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz's plan, there will be a 5-percent cut in the ministries' budget (a total of 175 million U.S. dollars).
The government will also approve a 3-percent cut to the 2013 ministry spending (a 500-million-dollar reduction) and a 1-percent increase in income tax for those earning above average salaries ( more than 2,000 U.S. dollars).
These moves are a part of a series of steps government officials say will boost the state's revenues by 3.5 billion dollars next year.
Another part of the plan includes collecting nearly 1 billion dollars owed by large corporations who were exempt from paying taxes according to agreements with them.
Treasury officials also said the cuts are necessary to cover new expenses like preventing African migrants' entry from the Sinai border and enhancing the firefighting service, etc.
"This package is supposed to provide a solution for dealing with the deficit, in order to protect Israel's credit rating, investments and economy," Steinitz told Army Radio on Monday.
"We are dealing with the deficit so we won't end up like Ireland, Spain or Greece. If we don't do this now, we'll end up paying more. We need to do this to protect the Israeli economy," he added.
Netanyahu himself said Monday morning that the government will take more from those who have more, and less from those who have less, according to Army Radio.
The plan is set to be authorized by a large majority, not including ministers from the ultra-Orthodox party Shas, who oppose the plan and will either object or abstain during the vote.
"Raising taxes will harm thousands of families in Israel, who have already been hurt by the increasing cost of living," Interior Minister Eli Yishai warned Sunday night.
Last week, Steinitz signed an order increasing purchase tax on cigarettes and alcohol. He did not deny the possibility of further cuts being announced next week.
The austerity plan drew criticism from political figures, ministers, opposition members and others.
Public Security Minister Yithzak Aharonovitch warned Sunday that the expected 45-million-dollar cut in his ministry's budget will lead to more "violence and crimes."
Union leaders in the health industry called the Health Ministry 's budget cut "disastrous."
Labor party chairwoman Shelly Yechimovich released data showing that 67 percent of the planned tax increases are regressive, thus affecting poor people rather than the rich.
However, Bank of Israel Governor Stanley Fischer reiterated his support of the plan, saying on Saturday that the move is " necessary" in order to deal with the twin threats of euro's collapse and the spiraling budget deficit.
"Given the situation, the measures are brave and essential for improving our budgetary situation in 2013. This will enable us to manage the economy and support group," Fischer said.
