Benjamin Netanyahu
Photo: Noam Moskowitz/Flash 90
PM backs raising deficit over taxes
Netanyahu sets 2013's State deficit goals at 3%. Move may prevent raising taxes but government will still have to implement lateral cutbacks
Prime Minister Benjamin Netanyahu decided Tuesday to increase the government's deficit goal for 2013 to 3% - 0.5% over the Treasury's recommendation of 2.5%.
The decision means that the government can suspend the decision to raise VAT rates by 1%. The latter, set to take effect on July 1, would have generated the State an additional NIS 5 billion in revenue.
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The Treasury's move to raise the VAT was criticized as yet another blow to the weaker echelons – a perception Netanyahu sought to avoid in the coming election year.
Increasing the deficit may stem several other financial levies the government planned to impose on the public, such as raining income tax and petrol prices.
Increasing the deficit's limits, however, will not exempt the government from implementing a NIS 6.5 billion ($1.65 billion) lateral cut in its budget next year.
Attila Somfalvi contributed to this report
