Finance Minister Yair Lapid said Friday that his proposed budget "is the responsible thing to do," and that for the first time all sectors of the country's economy are paying the price for Israel's huge deficit.
In an interview with Channel 2, Lapid said that "the middle class cannot afford to let the economy collapse." When asked why the middle class is bearing the brunt of the new tax hikes, as opposed to the more affluent sectors of the economy, Lapid said he "is no socialist": "I know the theory of taking from the rich," he said. "There is no place in the world that succeeded. I will not destroy the Israeli economy just so people stop writing bad things about me on Facebook."
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Lapid said he feels like donning his black t-shirt ("it would be a nightmare for my security detail") and going to the demonstration. He said he would like to stand on a box and ask the protesters what they are doing, why they are demonstrating against themselves.
Lapid said he understood the criticism of his new budget. "It comes with the job," he said of the anger directed at him. "Life does not end next week. I have been a minister for a month and a half. I will bring the economy out of the hole."
In the past few days organizers have called for a demonstration at Habima Square in Tel Aviv on Saturday evening. This demonstration is being organized by social activists Alon-Lee Green, Or Shai, Liat Biron and Shira Steinitz. The Facebook event page for the demonstration opens under the heading: “Yallah to the streets! Giant march: Take from the tycoons and not from us.” Within two hours the initiative raked in 20,000 people.
The Finance Ministry released the 290-page 2013-2014 budget on Tuesday, calling it “a budget of hope.” The most onerous items include a 1.5 percent increase in income tax rates, a NIS 7 billion cut in government spending in the remaining months of 2013 and another NIS 18 billion next year. VAT will rise 1 percent in June and children’s allowances will be cut to NIS 140 a month per child.
The total tax hike over the 2013-2014 period is expected to reach NIS 13.4 billion. Companies enjoying tax breaks under the Law for Encouraging Investment will be paying higher income tax rates as well as a five percent hike in taxes on dividends to 20%. Other cuts and revenue enhancers include canceling the exemption on VAT for tourists, canceling subsidies for after-school programs for children of working parents, raising taxes on lottery winnings and raising taxes on luxury goods. Various customs duties, such as on imported textiles and fish, will also be increased. Stay-at-home mothers will pay health taxes and National Insurance Institute contributions.
In a joint press conference Wednesday with Histadrut labor federation chairman Ofer Eini, Lapid defended the budgets cuts his ministry has proposed, insisting that they are necessary to prevent Israel from going down the same path as Greece.
“I won’t distribute money the state doesn’t have, like in Greece. What happened there could happen here, but not on my watch," Lapid said.
All sectors would be hit by the budget cuts, including ones that were not touched in the past, without succumbed to popular sentiments, the finance minister said.