Israel cabinet to vote on 2013 austerity budget

www.bethelfinance.com

 The Israeli government was meeting on Monday to vote on the 2013 austerity budget proposal after the security cabinet backed plans for a smaller-than-expected $840 million cut in defence spendin.
The decision to reduce the defence budget by 3.0 billion shekels came after a marathon session by the seven member security cabinet which run late into the night and continued on Monday mornong.
Ministers ended up overturninig Finance Minister Yair Lapid's demand for a cut of 4.0 billon shekels, with Prime Minister Benjamin Netanyahu stressing that defence funding was "essential to the security of Israel." a statement from his office said. He pledged that the difference of a billion shekels "would not come at the expense of the public."
" We need the Israel Defence Forces to continue its process of streamlining, but we also need more Iron Domes," said  Prime Minister, referring to Israel's vaunted anti-missile system.
He said : " I believe the way I am proposing today provides the correct balance between security needs and the needs of the economy."
 Israel,s newly-appointed finance chief had wanted to cut defence spending to help plug a budget deficit expected to be capped at 4.65% of GDP this year and 3% in 2014.
His austerity proposals for 2013, which have already sparked an angry public backlash, include an increase of 1.5 percentage points in personal income tax, one point in corporate tax and a one-point rise in VAT, together with a cut in family allowances.
 On Saturday, thousands took to the streets of Israel's main cities to demonstrate against Lapid's austerity budget in an echo of the mass cost-of-living protests which swept the country in summer 2011.
 At Monday's session, Netanyahu and his 21-member cabinet were discussing the full budget proposal for 2013-2014 with a vote likely to take place later in the day.
" We will do this today and by the end of the day, Israel will have the budget," Prime Minister said as the cabinet meeting got under way.
 Meanwhile outside his office, hundreds of tourism industry employees protested over Lapid's plans to eliminate the VAT exemption currently enjoyed by tourists. VAT currently stands at 17%.
 Tourism Minister Uzi Landau of Netanyahu's Likud-Beitenu faction warned that such a move could cause Israel significant financial losses and give a major blow to an industry that employs 200,000 Israelis.
" Tourism is a positive growth engine for the economy," he said in remarks relayed  his spokeswoman.
" More tourists mean more employment in the periphery and income for the state; a drop in tourism would means thousands unemployed," he said, warning he would vote against the budget unless the measure was removed.
 If the budget is approved, it must then be presented to the Knesset. or parliament, for approval by the end of July. The measures will come into effect on August 1.
Lapid has warned that if he was unable to push through the defence cuts, the axe would fall on health, education and social spending.
 The telegenic former TV anchor shot to prominence in the January elections at the helm of his newly-formed Yesh Atid by tapping into middle class grievances over the cost of living and social injustice.
The centrist party pull off a shock win, becoming the second-largest party in parliament and a central partner in Netanyahu's coalition government.