Finance Minister Benjamin Netanyahu's economic presentation to the cabinet yesterday had one main purpose: to prevent Labor's entry into the government. Netanyahu wants a minority government with a weak prime minister that will be dependent on him and his group of Likud rebels. With a little luck, he thinks, the government will totter until it falls, and he will beat Ariel Sharon in the primaries - and then go on to win the election.
Netanyahu believes that he can get the budget through the cabinet and Knesset without Labor. In the cabinet, he has a majority. In the Knesset, he can win over Avigdor Lieberman with some subsidized mortgages for new immigrants, and Lieberman's National Union will support the budget, enabling its passage.
The government will, of course, need support from Labor and Yahad to get the disengagement plan through the Knesset in February, but that bridge can be crossed later. After all, from Netanyahu's point of view, it would be no disaster if the plan failed to pass and Sharon fell.
Sharon understands this, which is why he talks constantly about a "stable government" - in other words, about Labor's entry. He does not want to be dependent on Netanyahu, which is why he met yesterday with Shimon Peres. But Netanyahu controls the budget. And the finance minister does not want to give Labor's negotiators any achievement that they could present to the party's central committee in order to obtain a majority for entering the government.
That is why Netanyahu wants the cabinet vote on the budget to take place Sunday - so that Labor will not be able to stomach a budget with so many cutbacks. Most of the cuts will not harm the weak, but rather the middle and upper-middle classes - precisely those whom Labor and the Histadrut represent.
The treasury is proposing, for example, that the ceiling for tax-exempt employer contributions to professional training funds (kranot hishtalmut) be lowered from NIS 15,200 to NIS 7,000. That would be a serious blow to the large and wealthy trade unions represented by the Histadrut - and
by Labor. For these workers (including employees of the ports, the banks, and the Israel Electric Corporation), who have an average salary of about NIS 20,000 a month, any harm to their keren hishtalmut would be a declaration of war against the Histadrut and Labor.
Labor and the Histadrut also cannot accept the cancelation of agreements that give public-sector employees wage bonuses for academic degrees. Nor can Histadrut Chair and Labor MK Amir Peretz agree to forgo half the salary increase that public-sector workers are supposed to receive in July 2005.
The treasury is also trying to increase the tax base, and therefore, wants to cancel the tax credit for non-working spouses. That is logical, since why should we encourage people not to work? It also wants to tax lotteries and gambling. That is also logical, but such an effort was blocked by the last Knesset.
The treasury is similarly correct in trying to raise the value of a company car for tax purposes and to cancel the tax deduction for value-added tax on light commercial vehicles, which also serve personal uses.
The treasury also wants to cancel tax breaks for people who work evening or night shifts. That is proper, but it will face a united front of the Histadrut and the manufacturers, so it has little chance of passing the Knesset.
Elderly people who have saved all their lives for retirement and now receive a pension of NIS 10,000 a month will also suffer a blow from the treasury: their National Insurance Institute old-age allotments will be reduced. That is unjust, because they have payed into the NII all their lives.
However, it is right and proper to increase civil servants' contributions to their pensions, which are currently almost entirely state-funded. Until now, pension reform has almost exclusively hit private-sector workers, who have contributed all their lives to Histadrut-owned pension funds. But this item will also obviously incur the opposition of the Histadrut and Labor, both of which represent the civil servants.
In short, Netanyahu has planted enough mines along the road to the budget to make it very difficult for Labor to enter the government.
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