A package of tax hikes that Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz will present the cabinet on Monday for its approval has sparked severe criticism among various officials. The package includes a 1% increase in VAT and income tax rates, and an across-the-board cut of 5% for most ministries' 2012 budgets, followed by a 3% cut next year.

Public Security Minister Yitzhak Aharonovitch said on Sunday afternoon that the budget cuts to his ministry – which amount to NIS 181 million – would cause a blow to the personal security of Israeli citizens. According to Aharonovitch, the cuts will cause four police stations to close, poorer dispersion of police patrol cars, immense difficulty in applying reforms to firefighting services, reduce the capacity to cope with the migration issue, and narrow the war against violence, drugs and alcohol.

However, according to the treasury, the cuts to the regular budgets, which would come to NIS 700 million in 2012, 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 will be
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.