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Kahlon, haredi ministers at loggerheads over budget
Litzman, Deri make NIS 9 billion worth budgetary demands that, if pursued, may require treasury to raise taxes or increase deficit.
Litzman and Kahlon met late Saturday night in an attempt to agree on draft budget proposals ahead of Sunday’s cabinet meeting, but the meeting ended with no results.
Litzman, the leader of the ultra-Orthodox United Torah Judaism party, is said to be adamant to foil the treasury’s attempt to cut child benefits and state funding for yeshivas, but Treasury officials said his stance is unsustainable.
“The budgetary demands amount to NIS 9 billion – we simply don’t have the money,” a treasury official told Ynet. “When Kahlon says we can’t do it, he’s not joking. If anyone has any bright ideas as to where to get the money, we’d love to hear them.”
bb.jpg "Yaakov Litzman (left), Benjamin Netanyahu (center), Moshe Kahlon (right). (Photo: Alex Kolomoisky, Ohad Zwigenberg, Gil Yohanan)")
Not only Litzman is on a collision course with Kahlon. Economy Minister Aryeh Deri, the chairman of the ultra-Orthodox Shas party, is too. One of his flagship campaign promises, the introduction of 0% VAT on basic foods, at the cost of NIS 1 billion, is also on the treasury’s blacklist.
Kahlon and Netanyahu held meetings last week with coalition party leaders, in an attempt to reduce their budgetary demands from NIS 9 billion to NIS 4 billion.
The realization that the budgetary allocations would have to be recalibrated last week, when the tax revenue forecast was completed and it became clear that going ahead as planned would lead to a NIS 6-7 billion deficit. It will be added to an already negative balance for 2016, that stands at NIS 5-6 billion.
Treasury officials are mulling two ways out of the deadlock, that might cost Netanyahu his majority. One is raising taxes and slashing other budgetary provisions – like the defense and civil service budgets - that will save the government NIS 4 billion.
A second option is to raise the debt-to-GDP ratio from 2.9% to 3.3%, which will add another NIS 4 billion to the reserve. This proposal would be met with fierce opposition from treasury officials, because it may result in downgrading Israel’s credit rating.
