Budget Vote Deferred After Shas Threatens to Vote Against Coalition

Shas claims it has yet to receive funds promised as part of coalition deal, while opposition blast petty politics.

Arye Dery.
Alex Kolomoisky

Israel's governing coalition is in crisis after the ultra-Orthodox party Shas threatened Wednesday to vote against the budget in the Knesset's key economic committee.

As a result, MK Moshe Gafni (United Torah Judaism), who chairs the Knesset Economic Affairs Committee, decided to adjourn the session and postpone the vote on the budget, at least until Prime Minister Benjamin Netanyahu returns from his visit to the U.S. next week, though no final date was set.

Emil Salman

The coalition has a slim majority of only one lawmaker in the committee, holding the vote of only nine MKs to the opposition's eight.

The key stumbling block is Shas' demand to see an ease in taxes on public transportation for the general public and on electricity costs for the poor. According to the party, the coalition agreement it reached with Netanyahu stipulated the value added tax (VAT) on both would be dropped to zero percent, in a move that would cost the state about 700 million shekels (roughly $179.6 million).

The political dissent was led by Shas MK Yitzhak Vaknin, who said he would not vote with the coalition on the budget, and not just because of the lack of agreement on the tax exemptions. According to the lawmaker, each of the two ultra-Orthodox parties was offered extra funds as part of the budget (20 million shekels each per the number of its MKs), but those allocated for Shas were never transferred. "The coalition agreement needs to be met," MK Vaknin said.

The committee chairman, MK Gafni, said that currently "there are disagreements within the coalition. I am not involved in them [but they pertain to] the deal reached between the two parties [Likud and Shas]," he said, adding that at first he tried to postpone the vote by a few hours, but soon released the issue would not be resolved so quickly.

TheMarker has learned that Shas chairman MK Ayre Dery met Wednesday afternoon with the director-general of the Finance Ministry, Shai Babad, and with the head of the ministry's budget department, Amir Levi.

Sources within Shas claimed that officials from the ministry had tried to backpedal from agreements reached as part of coalition deal, offering ad hoc discounts on the VAT on public transportation and electricity, instead of legislation rescinding the VAT all together. Dery rebuffed the offer and suggested postponing the committee's budget session until Sunday.

The party official also mentioned the promise to see 20 million shekels transferred to Shas for each of its lawmakers (140 million shekels in all), saying the party was fuming the ministry had failed to meet its end of the bargain.

Opposition lawmakers from the committee blasted the move as petty politics, with MK Arel Margalit (Zionist Union) saying "with the country burning, with small businesses shutting down, with the outlying areas still waiting for funds, with young people struggling to find a decent paying job - the obtuse government chooses to transfer 4 billion shekel to the coalition. Zero growth, 100% political survival."