Finance minister, Bank of Israel governor meet
as part of Finance Ministry's marathon session on future budget cuts •
Treasury officials propose raising value added tax rate to boost state
revenue • "I will do the right thing for the future even if it won't be
the most popular thing," says Lapid.
Finance Minister Yair Lapid
says he will do what is right, not what is popular.
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Photo credit: Uri Lenz |
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Finance Minister Yair Lapid and Bank of Israel
Governor Stanley Fischer met just before Passover to discuss a series
of budget cuts, amounting to 10 billion shekels (about $2.75 billion),
that the government will have to implement in the current fiscal year.
Prime Minister Benjamin Netanyahu and Lapid
met on Sunday and agreed on budget cuts in various areas of government,
including defense, transportation and welfare subsidies.
Following his meeting with the prime minister,
Lapid canceled the Finance Ministry's planned Passover vacation,
ordering a marathon session until the onset of the holiday and
throughout the holiday week to fully formulate the cuts.
Deputy Finance Minister Mickey Levy was also present at Lapid and Fischer's meeting.
In a statement released following the meeting,
Lapid said, "A series of cuts is unavoidable because we need to get the
economy back on track. We haven't made any final decisions about the
measures that need to be taken. When I have concluded the consultations
with Finance Ministry officials and with the prime minister, I will
explain the situation of the market, and the necessary cuts, to the
Israeli public."
In a post on his Facebook page, Lapid —
wishing the Israeli public a happy Passover — wrote, "As the finance
minister, I will do the right thing for the future even if it won't be
the most popular thing."
On Monday, Lapid also spoke with his American
counterpart, Treasury Secretary Jack Lew, and discussed the challenges
the global economy is facing.
Israel Hayom learned Wednesday that Finance
Ministry officials have presented Lapid with several alternatives to
lateral cutbacks, which stand to amount to 10 billion shekels ($2.75
billion) in the current fiscal year and another 20 billion shekels
($5.49 billion) in 2014.
The current cuts' outline includes measures
such as raising value added tax from 17 percent to 18%, and revoking the
VAT exemptions for produce and for products purchased in the southern
resort city of Eilat.
Increasing VAT rates is expected to yield about 7 billion shekels ($2 billion) a year in state revenue.
Lapid is also trying to devise a plan to
reintroduce the ultra-Orthodox and Israeli-Arab sectors back to the
workforce. "I'm concerned about these sectors' low participation in the
workforce," he said. "This issue significantly burdens the Israeli
economy and it must be dealt with without delay."
According the date presented to the government by the
Trajtenberg Committee for Social Reform, 56% of haredi men ages 35-64 do
not work, compared to only 15% of secular Jewish men in Israel.
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