Photo: EPA
Finance Minister Lapid with Prime Minister Netanyahu
Photo: EPA

4% cut in ministries' budgets approved

Government okays across-the-board cuts totaling some NIS 600 million, excluding Defense and Social Affairs ministries. 'This is a necessary move to prevent State from going bankrupt,' says Finance Minister Lapid

The government on Sunday voted in favor of an across-the-board cut of 4% in the budgets of its various ministries in order to fund the changes requested by members of the Knesset's Finance Committee in the budget plan, before it is submitted to the Knesset's approval at the end of the month.


Finance Minister Yair Lapid said following the cabinet meeting, "This is a necessary move in order to return to a responsible policy and prevent the State from going bankrupt."


The budget cuts, totaling some NIS 600 million (about $168 million), will apply to all government ministries except the Defense Ministry, which is not included in across-the-board cuts traditionally, and the Social Affairs Ministry, which has also been exempted from such cuts in recent years.


The budgets of the Education and Transportation ministries will be cut separately, and at a greater rate of NIS 500 million ($140 million) each.

ישיבת הממשלה הבוקר. לא כל תקציבי המשרדים ייפגעו (צילום: מרים צחי)

Sunday's cabinet meeting (Photo: Miriam Tzachi)


This is the second across-the-board cut executed by the government as part of the current budget, after ministries' budgets have been cut several times in the past two years.


Following the cuts, the Public Security Ministry's budget will be reduced by some NIS 90 million ($25 million) and the higher education budget will lose about NIS 50 million ($14 million), as will the budgets of the Economy Ministry and Prime Minister's Office.


The money saved as a result of these budget cuts, about NIS 1.6 billion ($450 million), will join some NIS 500 million ($140 million) the State will make from increasing dividend payments from profitable governmental companies.


Cuts aimed at easing austerity measures

Last week, Finance Minister Lapid reached understandings with Finance Committee Chairman MK Nissan Slomiansky (Habayit Hayehudi) on easing austerity measures and state budget cuts by NIS 3.5 billion ($980 million).


The planned 1.5% income tax hike on all income levels will be replaced with a gradual increase according to the following structure: A 1% rise on an income of up to NIS 14,000 (about $3,900), a 1.5% rise on an income of NIS 14,000 to NIS 22,000 ($3,900 to $6,000), and a 2% rise on an income of more than NIS 22,000 ($6,000).


In addition, the parties agreed to cancel the decision to impose a purchase tax on citizens moving to larger apartments. Instead, the purchase tax on expensive apartments (costing more than NIS 4.5 million instead of NIS 5 million as defined today) will go up from 5% to 6%.


Instead of cancelling students' income tax credit points, students completing their bachelor's degree studies will receive one credit point and master's degree graduates will get half a point for a year.


The decision to impose health tax and national insurance payments on housewives and reduce child benefits will be canceled. Child benefits will not change for children born before 2003. For younger children, the benefit will be reduced to NIS 140 ($39) per child a month



פרסום ראשון: 07.21.13, 14:16
 new comment
This will delete your current comment