BICOM

Israel’s Finance Minister Yair Lapid yesterday published his plans for the 2013 and 2014 state budget, which is set to increase taxes and cut public spending, leading to criticism from both the opposition and some of his ministerial colleagues.

Lapid’s plans include a 1.5 per cent rise in income tax across all tax brackets from 2014. Among the other planned measures are reduced child allowances, a one per cent rise in VAT and a reduction in expenses in all government ministries. The VAT exemption for tourist industries will also be cancelled. In total, state spending will be reduced by £4.5 billion between August 2013 and the end of 2014.

Lapid, whose electoral success in January was largely rooted in a campaign to protect Israel’s middle class, said yesterday via Facebook, “It is hard and people are angry but this is the definition of taking responsibility: to do what is hard, knowing people will be angry at you. “ He commented that “We can’t let anger blind us to the truth: The other option was the collapse of the economy.”

Opposition leader and Labour Party head Shelly Yachimovich held a press conference yesterday and slammed the budget plan as “a programme of recession and depression,” branding it as “cruelty for the sake of cruelty; a betrayal of the public and an economic mistake.”

Lapid’s plan also came in for criticism from fellow government ministers, with the likes of Environmental Protection Minister and Hatnuah MK Amir Peretz even threatening “I will vote against the budget the way it looks now,” explaining “This budget hurts working mothers.” Meanwhile, Tourism Minister Uzi Landau spoke out against the impact of planned VAT cancellations on the tourism industry while Pensioners’ Affairs Minister Uri Orbach pledged that he “will not abandon the elderly in the fights against… cruel budget cuts.”