Taxes on alcohol and cigarettes are set to rise, along with an expected gasoline price hike of 40-50 agorot per liter that is the result of the high dollar exchange rate and rising oil prices.
For many Israelis, this marks another blow in an already frustrating socioeconomic reality. "All the price hikes are killing us," said Rachel Cohen, 52, from Jerusalem. "The economy might have grown but people are worn out."
Steinitz and Netanyahu (Photo: Ohad Zwigenberg)
In addition to raising taxes and cutting spending, Steinitz plans to ask the Treasury to add another 600 workers to the Israel Tax Authority to improve its tax collection capability.
Prime Minister Benjamin Netanyahu said that "Anyone who says that it's possible to spend without thinking, without coverage, for populist purposes – is simply endangering the State of Israel and can easily bring it to the situation we have seen in leading European economies that are going broke. That hasn't happened here – I won't let it happen here."
'PM should cut uneeded ministers'
Not everyone is convinced. "If the prime minister says there's no money, let him cut his unneeded ministers and the deputy ministers," Cohen said. "Let him take money from the rich tycoons who make millions off our backs. He should leave us alone."
The various social justice groups are also concerned. "Bibi is doing it again," Ran Melamed, Director-General of the Yadid organization, told Ynet. "Instead of raising the cap for National Insurance payments and raising VAT on luxury items only, he has chosen the easiest path and is screwing the weak."
"Raising indirect taxes, like VAT, at a flat rate, rather than a progressive rate, will mainly hurt the collapsing middle class and the weak sectors," Melamed explained.
Uriel Lederberg, Director-General of Pa'amonim, a group that helps families who have encountered economic difficulties, said "I understand the need to take preventative action so as not to reach the situation of countries in Europe, but it's possible to do it another way – take more from the rich via direct taxation, fight the black market, cut government spending, and if they raise the VAT – at least cut it on basic items so as not to hurt the poor."
Shahar Chai contributed to this report
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