Man of the Year: Yair Lapid

Yair Lapid has gone a long way from the days before the election, when he promised the world to the weary, downtrodden members of the middle class, to his responsible conduct as finance minister.

In a country like Israel, selecting a Person of the Year when it comes to the economy is a luxury. At any given time, we are on the verge of some kind of security incident, diplomatic crisis or attack so why now turn our attention to the economy? But we're supposed to indulge in the extravagance of discussing our quality of life instead of the protection of life itself? Nevertheless, the Jewish year that is drawing to a close, 5773, was a year in which, for the most part, the economy was front and center. And the Man of the Year has been Finance Minister Yair Lapid.

When the year began, the dominant issue was the surprisingly large budget deficit. And by the time 2012 ended, we had a government deficit of NIS 39 billion. If nothing had been done, the deficits for 2013 and 2014 would have been even larger. That's the sorry legacy left by former Finance Minister Yuval Steinitz and then-and-current Prime Minister Benjamin Netanyahu. The size of the deficit was also the reason Knesset elections were brought forward to January of this year, and they resulted in an astounding 19 Knesset seats for Yair Lapid and his new party, Yesh Atid.

Who would have thought that of all the politicians, he would be the one to benefit from the social justice and cost-of-living protests that erupted two years ago? But he promised a much better life for the weary, downtrodden members of the middle class, with lower taxes and lower prices that would be achieved at the expense of those who have the connections - the wealthy, the ultra-Orthodox and the business monopolies. The voters believed Lapid and voted for him.

But after the election, when Netanyahu offered Lapid the Finance Ministry, the Yesh Atid leader recoiled at the idea. The economy was not his thing. He actually wanted to be foreign minister. Now, however, he understands how correct his decision was to take the finance portfolio. It enabled him to be in the news all the time (even when the coverage is negative) and give him the opportunity to carry out changes and adjustments to the reality in which we live.

The middle class is angry at Lapid, who has become the lightning rod for the group's anger and disappointment. And instead of heaping the members of the middle class with favors, he raised their taxes. But what could he do? Stark realities forced him to cut government spending and raise taxes. If he had done otherwise, we would have descended into the kind of situation that Greece and Spain have been facing. and he would have been declared a failure. So the problem here isn't that he broke his promises to the middle class. What he did was correct, but he also lacked courage with respect to the whole subject of reform and structural change.

Up to this point, he has mainly made popular changes. Cutting the defense budget is popular. Going after the ultra-Orthodox with full force is popular. But fighting those with connections such as pressure groups and major unionized workers' committees and the Histadrut labor federation is something else entirely. It's dangerous. Those pressure groups are capable of firing back, protesting and ruining a politician's image. The silent majority, on the other hand, takes it with a whimper.

So in the most political approach possible, Lapid decided not to go to battle with any of the strong groups and instead hit that silent majority. He surrendered without a fight to Histadrut labor federation chairman Ofer Eini. He failed to carry out important reform measures in the public sector and didn't require higher contributions into preferential defined-benefit pension that are common in the sector. He also agreed to impose a trifling 1 percent wage deductions that must have had Eini dying of laughter.

He didn't repeal current value added tax exemptions fruits and vegetables and foreign tourism services or the overall VAT exemption in the city of Eilat. He didn't curb the income tax exemption on savings in so-called continuing education funds ("kranot hishtalmut" in Hebrew). He put a halt to reductions in customs duties on industrial products; didn’t raise the retirement age for women; didn't raise university tuition; and didn't lower the huge customs duties on imported dairy products, meat, chicken, fish, tuna, olive oil, honey, and fruits and vegetables.

So it's no wonder that food prices in Israel have remained twice as high as those in Europe or that the taxes on the silent majority had to be hiked. That's what happens when you don't eliminate exemptions enjoyed by those with the connections. And recently Lapid broke all records for populism when he supported the decision to scrap the standardized Meitzav school achievement exams. He even boasted that he would also do away with a large portion of the matriculation exams.

But there still is hope. Lapid knows how to apply himself to studying the issues and he also has administrative skills. He can be a good finance minister. He is well aware of the importance of the reform measures that he hasn't carried out, and he subscribes to a liberal worldview that places importance upon competition and efficiency. He could charge ahead and do what is necessary in the Jewish new year to come, 5744. May we be inscribed for a year of reform.

Finance Minister Yair Lapid.Credit: Ofer Vaknin

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