BICOM

Although they have yet to resolve all their differences, Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid met yesterday to discuss the fractious 2015 budget and are reportedly close to an agreement.

Plans to present the annual budget to the cabinet and subsequently to the Knesset are months behind schedule due to Operation Protective Edge. Factoring in the significant cost of the campaign and a subsequent demand to increase the defence budget has led to sharp contention between Netanyahu and Lapid. While Netanyahu favours greater defence spending and raised taxes to help cover the cost, Lapid is vehemently opposed to increasing taxes; with the middle-class forming the base of his Yesh Atid party’s support. Instead, Lapid wants to increase the deficit to cover a more modest rise in the defence budget. By law, if the budget is not approved by the end of March, then a general election will be held.

With a coalition crisis in the interests of neither leader, it was reported over the weekend that an agreement between Netanyahu and Lapid had been reached. Apparently, it stipulates that the deficit will be raised to 3.4 per cent, there will be no increase in taxes and Lapid’s flagship legislation to scrap VAT for many first-time home buyers will also be approved.

However, when the two met yesterday for about an hour, it emerged that they have yet to agree on the extent of the increased defence budget. The Defence Ministry requested an extra £1.8 billion in the wake of the summer’s Gaza conflict. However, Lapid had apparently agreed to increase the budget by just £1 billion, a figure which is reportedly unacceptable to both Defence Minister Moshe Ya’alon and to Netanyahu.

Haaretz reports that Lapid and Netanyahu will meet again before the Jewish New Year which commences on Wednesday evening. However, Netanyahu will soon after depart for New York to attend the opening of the United Nations’ General Assembly, potentially delaying further talks.