Likud Calls Coalition Demands 'Insane and Extortionist’ as Right-wing Parties Balk

Three days before Netanyahu’s deadline for putting together a coalition, Likud is worried about talks with right-wing parties Habayit Hayehudi, Shas and Yisrael Beiteinu.

Prime Minister Benjamin Netanyahu with United Torah Judaism MK Yaakov Litzman
Prime Minister Benjamin Netanyahu with United Torah Judaism MK Yaakov Litzman at the Knesset, March 18, 2015.Credit: Emil Salman

Three days before Prime Minister Benjamin Netanyahu’s deadline for putting together a coalition runs out, Likud officials said Saturday they were concerned about the negotiations with right-wing parties Habayit Hayehudi, Shas and Yisrael Beiteinu.

At the same time, in a letter to Netanyahu, Yesh Atid leader Yair Lapid threatened to go to the High Court of Justice if the prime minister insisted on appointing United Torah Judaism chief Yaakov Litzman deputy health minister.

In the letter, Lapid argued that the post needed a full cabinet minister, not a deputy minister. He also expressed reservations about Litzman and his ultra-Orthodox party.

“Insane and extortionist” was how a senior Likud official described the demands of Habayit Hayehudi, Shas and Yisrael Beiteinu for agreeing to join the coalition.

One sticking point last night was Shas chief Arye Dery’s rejection of the appointment of a deputy minister from Habayit Hayehudi to serve under Dery in the Religious Services Ministry.

“Just as the education minister is responsible for education, and I’m sure he’ll represent us as he represents all Israeli children, they must trust the Shas minister in the Religious Services Ministry,” Dery said. Habayit Hayehudi is expected to control the Education Ministry in the new government.

A Likud source said Saturday that the crisis surrounding the Religious Services Ministry was at an impasse. He also claimed that Habayit Hayehudi leader Naftali Bennett was making demands for allocations totaling 2.5 billion shekels ($648 million) for the Education Ministry, without any agreement having been reached with Likud.

Officials in Bennett’s party, meanwhile, said an agreement was close on nearly half that sum.

The finance minister-designate, Moshe Kahlon, says raising taxes on the purchase of residential properties for investment purposes will be examined as a way to move speculators out of the market. This would make room for first-time home buyers, most of whom are young married couples with limited means.

Appearing last night on Israeli television’s “Meet the Press,” Kahlon refused to say how much of a tax hike he sought, but he did say it would not be as high as 20 percent.

“Everything will be clear. We won’t topple the market or disrupt the balance between buyers and the rental market, [which is] no less important than the sales market,” Kahlon said.

“Things got out of hand, every number’s a winner,” Kahlon joked while addressing reports that he planned to hike the purchase tax on residential properties bought for investment purposes.

“There are two markets, the market for buyers and the market for renters,” he said. “A high sales tax could help the market for buyers because it will repel investors. Twenty-five percent of home buyers are investors, who must be moved aside. On the other hand, it will hurt the renters’ market.”

Responding to a question on the market for first-time home buyers, Kahlon said young couples should wait patiently. He said he would consult with economists and other experts before introducing any new measures.

“I recommend going with life as usual; there won’t be any drama,” he said. “After we block the rise in home prices, housing prices will drop.”

Kahlon confirmed that he plans to increase competition in the banking sector, including by encouraging the establishment of new banks.

“I’ll convince the Bank of Israel to open the banking market to competition,” he said. “Three banks control over 60 percent of the market; that’s an impossible situation.”

Kahlon said he did not support an income-tax rise, preferring to tax capital rather than labor. This could happen through the introduction of inheritance taxes.

He said it was important to do everything possible to reduce expenses for low-income Israelis, including the elimination of the value-added tax on food staples “if that turns out to be the right thing to do.”

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