Lapid, Netanyahu conclude budget battle with compromise
Defense ministry to recieve a total of NIS 13 billion to cover war expense while tax rates remain as is; extra funds to be taken from nation's reserves leaving deficit at 3.4% in 2015.
In a successful maneuver of political compromise, Finance Minister Yair Lapid and Prime Minister Benjamin Netanyahu agreed Wednesday to a budget deal that will inject an extra 7-8 billion shekels of funds to the Defense Ministry while following Lapid's demands to leave the nation's tax rate as is.
The new funds to the defense budget will be added on top of six billion shekels already handed to Defense Minister Moshe Ya'alon to help cover the heavy costs of the IDF 50-day Operation Protective Edge in the Gaza Strip.
Finance Minister Yair Lapid got what he wanted out of the budget deal . (Photo: Ilan Shapiro)
The decision between the two concludes several weeks of political infighting over the 2015 budget during which Netanyahu said that he supported meeting the Defense Ministry's budgetary demands, while Lapid insisted to Ynet that he would bring down the coalition before allowing taxes to be raised.
Wednesday's meeting between Netanyahu and Lapid was the second direct discussion between on the two as they worked to come to a deal before Rosh Hashanah and they were also able to come to conclusions on several issues facing the Knesset as MKs prepare for the upcoming winter session.
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An official announcement released at the end of the meeting said that the total defense budget for 2015 will stand at 57 billion shekels while the deficit target would reach 3.4% without increasing taxes.
"We got the impression that Lapid really doesn't want elections," said a senior source from with the Likud Party. "Therefore, we were able to move forward with him on the budget issue and pass the 0% VAT law."
Netanyahu, Ya'alon, and Chief of Staff Benny Gantz got the funds they requested for Operation Protective Edge. (Photo: GPO)
Lapid's zero percent VAT plan was another one of his key initiatives which he was loath to see dismantled in favor of the military budget. The law exempts certain young couples from VAT taxes on the purchase of their first home.
Sources close to the negotiations between Netanyahu and Lapid said that the agreement demands additional monetary financing that will be taken from reserve funds. Lapid, said the sources, didn't insist on any further cuts to social programs or offices. In effect, the deal gives Ya'alon a total of 13 billion extra shekels for defense, as he requested.
Netanyahu and Lapid
Photo: Gil Yochanon
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