In addition to the package of tax hikes that Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz will be presenting to the cabinet on Monday for its approval, the ministers will also be asked to vote on a flat, across-the-board cut of 5% in most ministries' 2012 budgets. The cuts would come to NIS 700 million this year.

The treasury says the cuts in the regular budgets are necessary to free up funds to cover new expenses. These include steps to stop the entry of migrants across the Egyptian border, to upgrade the country's firefighting network and to improve civic defense preparedness in times of emergency.

Although the budget for next year has not been fleshed out yet, the cabinet is being asked on Monday to approve an additional 3% cut to ministry spending in 2013, amounting to a reduction of NIS 1.8 billion.

The cabinet is expected to approve the spending cuts by a large majority. Ministers from the Shas party are expected to either vote against the measure or to abstain.

Over the weekend, Steinitz reached agreement with the leader of Yisrael Beiteinu, Foreign Minister Avigdor Lieberman, ensuring the party's support for the proposals as long as they do not apply in full to the Immigrant Absorption Ministry. Reductions in the suggested 2012 cuts will apply vis-a-vis the Defense Ministry, the Social Affairs Ministry and the Education Ministry.

Although in principle the ministries have free reign to decide where they cut spending, in practice the process will be overseen by the budget division of the Finance Ministry.

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