Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz
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Treasury reconsidering tax hike plan
In wake of election results, Finance Ministry official says 'there is a good chance' of passing measures rejected by prime minister in the past
Finance Ministry officials have begun working on different economic measures than the ones previously planned to reduce Israel's huge budget deficit, following the Knesset election results.


A Treasury source said Thursday that "there is now a good chance" of passing plans discussed in the past, which have been rejected by Prime Minister Benjamin Netanyahu and his predecessors for coalition reasons.


Meanwhile, the Treasury is shelving some measures which were to be executed after the elections, including raising the value added tax and increasing the income tax by 1% for all citizens earning more than NIS 8,000 (about $2,150) a month.


In the coming days the Finance Ministry will form a package of budget cuts that will not harm the areas of education and welfare, which are valued by potential coalition parties.


The Treasury source noted, however, that "the ministry is not preparing its plans according to politicians' agenda, but according to what is best for the economy."


At the same time, Foreign Ministry Director-General Rafi Barak has been holding marathonic discussions over the drastic cuts planned in his office – nearly half of the operations budget which totals just NIS 200 million ($54 million) a year.


"It's a fatal cut which will paralyze the embassies," said a ministry source.


The measures considered in order to save NIS 82 million include closing 10 of Israel's offices abroad, reducing the PR budget and dismissing contract workers.


The Foreign Ministry issued the following statement in response: "We have no intention of commenting on the content of internal discussions."


Itamar Eichner contributed to this report



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