Prime Minister's Expert Panel Says No New Budget Expected for 2012

Panel expects to propose changes both on the revenue and spending sides, but without exceeding the approved budget framework.

The "team of experts for socioeconomic change" appointed by Prime Minister Benjamin Netanyahu in response to the mass protests met for the first time Tuesday in Jerusalem. The committee is chaired by Prof. Manuel Trajtenberg, the former head of the National Economic Council. "We have been given a rare opportunity to create change for the good of the country so dear to us. It is not an easy thing but we will do it," said Trajtenberg, the chairman of the Planning and Budgeting Committee of the Council for Higher Education.

Trajtenberg said the committee's job is to "translate the public's sentiments into a professional understanding and political action." He emphasized the short timetable and the need for intensive work and full involvement on the part of the committee members.

Netanyahu, Trajtenberg panel
Amos Ben-Gershom

Members of the team as well as senior Finance Ministry officials said Tuesday that they do not expect to prepare a new budget for 2012, but will instead propose changes in the two-year budget that was passed for 20011 and 2012. They expect to propose changes both on the revenue and spending sides, but without exceeding the approved budget framework.

Netanyahu appointed the committee on Sunday, tasking it with preparing a document to propose solutions to the protesters' demands. The group is supposed to present its recommendations by the end of September to the socioeconomic cabinet. After its ministers discusses the proposals, it will present its own recommendations to Netanyahu, who will then present his proposal to the full cabinet. This is expected to take place at the end of October or early November.

The committee discussed a number of matters Tuesday, including its schedule and how it will conduct business. The committee decided to divide up into smaller working groups. Prof. Eugene Kandel, the present head of the National Economic Council, will head the subgroup on taxes. Dr. Shlomi Parizat, the chief economist at the Israel Antitrust Authority, will head the team on competition and cost of living. The group on social services will be lead by Gal Hershkovitz, the new head of the treasury's Budgets Division. Eyal Gabai, the director general of the Prime Minister's Office, will head the subcommittee on housing.

The committee has 14 members, 10 of whom are government or other public officials, and only four come from the outside. The small number of outsiders is due to numerous refusals to join the group. Netanyahu and Trajtenberg chose the experts.

In addition, one team will examine the economic implications of the overall recommendations, as well as finding budgetary sources for financing the recommendations. Another group will be responsible for establishing communications with the public, an "infrastructure for dialogue," including opening an Internet portal and forum as soon as possible. This group will operate in cooperation with Michael Eitan, the minister for the improvement of government services.

The full committee will meet again next Tuesday after all the subgroups have had a chance to meet and start working.

"This is an emotional event. It is also one of the hardest days in the Jewish calendar," said Trajtenberg at the beginning of the meeting, refering to the Tisha B'Av fast yesterday. "But in addition to the destruction [of the Temple], it also symbolizes a new start for the Jewish people. I hope the start of the team's work on this day symbolizes the start of a better future," he said. "This wave of protests expresses a yearning for something tangible called social justice."

Two Finance Ministry groups have already started work on tax and budgetary issues involved, one headed by the head of the Israel Tax Authority, Yehuda Nasradishi and the other by Hershkovitz.

The Tax Authority team will recommend lowering VAT, while raising tax revenues on the other hand by canceling the reductions in income and corporate taxes scheduled for 2012. Other recommendations will include raising taxes on the rich, freezing changes in the Capital Investments Law, levying an inheritance tax on very large estates and canceling a long list of tax exemptions. Other possibilities are reducing purchase tax on cars and fuel taxes. As for spending cuts, one possibility is cutting the defense budget, or an across the board cut in all government spending.