Kahlon Struggling to Win Cabinet's Support of Budget

Sources say the finance minister has enough support to secure majority, but ministers from Shas and Habayit Hayehudi are playing hardball.

Zvi Zrahiya
Zvi Zrahiya
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Finance Minister Moshe Kahlon, May 18, 2015.Credit: Gil Cohen-Magen
Zvi Zrahiya
Zvi Zrahiya

Finance Minister Moshe Kahlon is still struggling to win support for the 2015-16 budget, with ministers from Shas and Habayit Hayehudi, as well as some Likud ministers, saying they oppose his spending plan.

Meanwhile, Prime Minister Benjamin Netanyahu Wednesday told the cabinet – meeting for the first of two days of budget deliberations – that he hoped to combine elements of the Locker report on defense spending with ideas proposed by the army itself, called the Gideon plan, over the next few weeks.

In any event, Netanyahu said, he is determined that the army will, in coming months, get more than the 56 billion shekels ($14.7 billion) the treasury is currently proposing for 2016 – which is far less than the 62 billion shekels the defense establishment wants.

“We are in the process these weeks of studying the two proposals, and will probably draw lessons from them and combine them,” he said, revealing for the first time his views on the defense budget and the reforms Locker recommended. “Afterward, we will create a connection between the changes we want to make to the defense budget and increasing it beyond what has been proposed here.”

The prime minster also said the government was aiming for the economy to grow 4% – if not this year, then in 2016. “We won’t be satisfied with less than that. We need to do everything to achieve low taxes,” he said. He also gave his backing to Kahlon – who heads Kulanu, the biggest of the junior coalition partners – and the finance minister’s plans to increase the supply of housing and rein in price hikes.

Nevertheless, Kahlon and Netanyahu were still working to win over key ministers for the spending package.

Economy Minster Arye Dery, who had reportedly agreed Tuesday to back the budget in exchange for fare cuts of 15-20% in public transportation and for the lowest income group for electricity and water rates, ended up boycotting the meeting along with David Azoulay, the second minister from his Shas party.

“The talks between Economy Minster and Shas chairman Arye Dery and the heads of the treasury reached a deadlock last night,” the Shas spokesman said. “Minister Dery is demanding that the four lowest deciles are exempted from value-added tax for electricity and water, and that VAT be eliminated on public transportation.”

Meanwhile, talks between Kahlon and Education Minister Naftali Bennett, who leads Habayit Hayehudi, had reportedly made progress over Bennett’s objections to budget cuts for schools and higher education. The two met several times on Wednesday, sometimes in the presence of Netanyahu.

Bennett said he and the other two Habayit Hayehudi ministers would vote against the budget unless it contained measures to reduce classroom overcrowding and encourage more high-school students to study advanced math. But treasury sources said the real issue was spending for the party’s pet causes – settlements and Jewish studies programs in schools.

Miri Regev (Likud) said she would oppose the budget because it cuts her Culture and Sports Ministry’s budget, and Interior Minister Silvan Shalom (Likud) is also currently planning to vote no. Kahlon did land Public Security Minister Gilad Erdan, who agreed to back the budget in exchange for more money for his ministry.

Sources said they believed that even if Netanyahu and Kahlon fail to win over the current list of no voters, they still had a cabinet majority for the budget.