Israel’s Finance Minister Says His Economic Package Will Be Approved in Full

Aides to Prime Minister Netanyahu express qualified support for Kahlon’s proposed aid and tax breaks for families

Finance Minister Moshe Kahlon.
Ofer Vaknin

Finance Minister Moshe Kahlon said Wednesday that he’s certain the package of tax breaks and subsidies he unveiled on Tuesday “will pass as is.”

The program offers a number of benefits intended to help families with young children, including subsidized after-school day care, additional tax credits for working parents, an expanded negative income tax and the removal of taxes and customs duties on various consumer goods particularly needed by families. If enacted in full, it is expected to save families with children thousands of shekels a year.

Kahlon, who spoke on Wednesday at a ceremony to inaugurate a new facility at Haifa’s Rambam Medical Center, was also asked whether Prime Minister Benjamin Netanyahu was upset over the plan’s announcement, since Kahlon didn’t inform him about the details of the package before unveiling it at a special news conference. “I’m not aware of anger from any quarter, and there never can be anger about providing such great assistance to families with children,” the finance minister replied.

Aides to Netanyahu offered qualified praise for the plan immediately after the press conference. “The government’s policy is to reduce the cost of living and encourage people to work,” one said. “The proposals that were presented are in the right direction and will be reviewed with a positive attitude.”

But aside from the fact that relations between Netanyahu and Kahlon are tense in general, the prime minister has some substantive disagreements with Kahlon’s proposals. For instance, he thinks the annual budget for disability allowances should be increased by only 2.5 billion shekels ($680 million) rather than the 4 billion shekels Kahlon proposed, and that the government should reduce income and corporate taxes across the board instead of focusing on benefits for families with young children.

Kahlon said at the ceremony that his program will solve the financial problems of the middle class. “This is a social, moral and ethical issue, for the benefit of the middle class,” he added.

But Health Minister Yaakov Litzman, who also attended the ceremony, used the occasion to criticize the plan for not including funds for home nursing care.

“I’ll say something to the finance minister about his plan, which I greatly respect,” Litzman said. “If you’ve found money for all the things you sought, I need the nursing care I promised the public. ... It’s inconceivable that we should abandon our elderly.”

Netanyahu and Kahlon have been at odds ever since the two-year budget for 2017 and 2018 was passed in December. Netanyahu considers his finance minister too independent, while Kahlon thinks the prime minister is claiming credit for his achievements.

Their conflict peaked last month, when Netanyahu demanded that the launch of a new public broadcasting corporation be delayed, but Kahlon refused. That fight brought the government to the brink of collapse before it was resolved by a compromise.

On Tuesday, Haaretz reported that Netanyahu had also planned to announce an increase in disability allowances right before Passover, but when Kahlon got wind of that plan he preempted the prime minister by announcing his own plan for increasing the allowances.