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Netanyahu freezes Lapid’s flagship legislation, intensifying coalition tension
The battle between Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid over the 2015 state budget intensified yesterday as Netanyahu effectively froze Lapid’s flagship initiative to exempt many first time homebuyers from VAT.
Lapid’s proposed legislation has been in the works for several months but has proven controversial. It is designed to make housing more affordable for many young middle-class Israelis, who are the core of Lapid’s Yesh Atid party support. However, to qualify for the VAT exemption, buyers must have served in the IDF or parallel national service, effectively excluding ultra-Orthodox and Arab citizens. The plan has also been criticised by many economic experts as an ineffectual and potentially costly way to make housing more accessible.
It appeared yesterday that political wrangling over Lapid’s bill had been resolved, as the Knesset Finance Committee finally approved the bill after a compromise with ultra-Orthodox committee members, passing the legislation on to the Knesset House Committee. However, according to Haaretz, House Committee Chairman and also coalition chairman, Likud MK Yariv Levin said last night that, “We can’t discuss the zero-VAT bill separately from the state budget.”
Channel Ten reported last night that Prime Minister Netanyahu does not want to give his backing to Lapid’s flagship policy until he is sure that Lapid will remain in government, due to sharp differences over the 2015 budget. The two remain at apparent loggerheads over the annual budget, which is behind schedule following Operation Protective Edge. In order to cover the cost of the conflict and a need to boost the defence budget, Netanyahu favours raising taxes to help foot the bill, which is vehemently opposed by Lapid, who wants to increase the deficit to cover a more modest rise in the defence budget.
Although commentators broadly agree that neither Netanyahu nor Lapid favour a coalition crisis which could trigger elections, if the budget is not approved by the end of March, then a general election will be mandated.