Knesset to bring budget to final vote

The Knesset is set to bring the budget to its final votes on Monday night, in a marathon 24-hour discussion.

MKs began debating the budget on Tuesday and Wednesday, ahead of the final vote, and the speeches will continue on Monday morning.

On Monday afternoon or evening, opposition leader Shelly Yacimovich (Labor) is expected to close the discussion with her remarks against the budget, and voting will begin.

The Knesset is scheduled to complete voting on the budget on Tuesday at 9 a.m., a full 24 hours after the discussions are set to begin Monday, closing a full 45 hours of debate for the budget’s final vote.

Last week, presenting the budget to the Knesset, Finance Minister Yair Lapid touted it as one that makes everyone carry the tax burden equally and creates stability through fiscal discipline to encourage growth.

“We’re moving from a culture of handouts to a culture of work,” he said. “Work is a Jewish and a social value.”

The current version of the budget contains a slew of changes from Lapid’s original proposal in May, though the overall framework remains the same.

While deficit targets of 4.65 percent for 2013 and 3% for 2014 remained in place, overall spending increased from NIS 388.34 billion to NIS 395b. for 2013, and fell from NIS 408.06b. to NIS 405.27b. for 2014.

Prime Minister Binyamin Netanyahu intervened to scale back NIS 1b. of the NIS 4b. in defense cuts originally planned for 2013, though the defense budget is tentatively set to be NIS 3b. lower than Lapid’s original plan for 2014. The cabinet on Sunday approved a 4% overall reduction in ministries’ spending, including NIS 500 million cuts to those ministries whose budgets increased over previous years, including education, transportation and welfare.

The Knesset Finance Committee reached a compromise on National Insurance Institute monthly child allotments, which were to be slashed to NIS 140 per child across the board. Instead, they will now range from NIS 140 for each of a family’s first two children to NIS 354 for a fifth child.

The plan to raise income tax 1.5% across the board gave way to a progressive tax, distributing increases of 1%, 1.4% and 2% across the income brackets, setting the highest rate at an even 50%. The corporate tax will rise to 26.5%, 0.5% above the originally proposed 1% increase.

Changes in the tax code that would affect housewives and recent graduates were eliminated, as was a tax for homeowners seeking to buy new apartments.

Other portions of the original proposal had already been voted into law, including a 1% increase in value-added tax, bringing it to 18%; additional taxes on cigarettes and beer and changes to hard-alcohol taxes. But plans to eliminate the VAT exemption for tourists were nixed, as was a plan to impose VAT on fruits and vegetables.

Due to the budget’s late passage, changes in the 2013 budget will have only a limited impact. For the first seven months of the year, the government ran on monthly disbursements of one-twelfth of the 2012 allocations; what’s left will be distributed for use in the last five months of the year.

Niv report.

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