Prime Minister Benjamin Netanyahu was blasted by opposition leader Tzipi Livni during an economic debate in the Knesset yesterday, for his support of a plan to charge VAT on fruits and vegetables.

"You are being stubborn in the wrong place," Livni said to him. "Your stubbornness on the matter of tax [reductions] is strange, and charging VAT for fruits and vegetables is particularly hard to understand. As for VAT - be a man and give in. In the end you will give in - and it will happen exactly when you are trying not to." She added that the prime minister was giving in to the wrong people on the wrong issues, and that he was not consistent when he decided to increase spending.

"Why did you surrender to [Defense Minister] Ehud Barak, who will not leave the government under any circumstances?" she said.

Netanyahu spoke before Livni, and he listed the economic steps his government has taken: formulating an economic plan, passing a two-year budget in the cabinet and signing an agreement with the Histadrut labor federation and employers. "We are not in normal times," said Netanyahu. "In addition to the unprecedented economic crisis befalling us, like the rest of the world, we are facing special security challenges which no other country is required to deal with. Unity is especially needed now. We need to unite our forces."

Finance Minister Yuval Steinitz called the state budget "ultra-social." He said it will narrow the gaps in Israeli society and significantly increase the income of the lowest 20% of the population at the expense of the top 10%.