Minister of Finance, Bezalel Smotrich. The credit points for working parents will wait until next year, the funds for the ultra-Orthodox will be transferred retroactively, from the beginning of the year. (Photo: Reuven Castro)
Finance Minister Bezalel Smotrich suffered from extraordinary smugness this week, even according to his size. Earlier this week, he addressed budget policy and claims of inflated budgets for ultra-Orthodox parties at the expense of the entire population.
"The previous government allocated NIS 53 billion to Mansour Abbas. The budgets for the ultra-Orthodox are also a remedy for longstanding discrimination. We will invest less in cats and Abbas. The media is doing death to this government to topple it. It won't work for her." So said the finance minister.
But if indeed the finance minister is so proud of his actions, then why were these funds not part of the customary budget base, but were hidden in clauses and sub-sections? The answer is that this is an unprecedented robbery of the public purse.
Samtorich's position, which has the support of Prime Minister Benjamin Netanyahu, attests to his priorities.
How much talk have you heard about additional tax credits for parents of children aged 12-18? The prime minister even convened a special prime-time press conference together with the ministers of education and finance, as if he were about to invade Lebanon.
But these (let's ignore for a moment that this is a very partial solution) will only be provided from 2024. On the other hand, support for yeshiva students (without core studies) will be transferred retroactively, while perpetuating the illiteracy clause. The ultra-Orthodox will be spoiled in the 2023-2024 budgets with record support of over NIS 13 billion.
For the treatment of cats that so upset the Minister of Finance, only a few million shekels were allocated for sterilization of them, but the Minister of Finance made a mistake out of it. That's how it is that the cat is allowed to keep the cream, which we all worked on and which will henceforth be directed to sectors that contribute nothing to the Israeli economy.
And what about the "Abbas tax"? Recall that this is a five-year plan for the Arab sector worth NIS 30 billion, not NIS 53 billion. The money itself will continue to flow as usual by Netanyahu and Smetrich. If anything, let's see the heroes in their own eyes abolish the "Abbas tax."
It won't happen – and you know why? Because Netanyahu needs the safety net of the Islamic Movement to support the budget. You know why else? Because Justice Minister Yariv Levin wants their votes to support the legal reform – and for that he is willing to build a hospital in Sakhnin. That's how it is in the government of change for the worse, strong mainly in words.
Toiletries in a supermarket in Israel. Prices are the most expensive in the world, but the government of change for the worse has left the reform aimed at fighting "exclusive" importers out of the Arrangements Law (Photo: ShutterStock)
A dysfunctional government in the fight against the cost of living
But let's leave the budget and move on to the Arrangements Law, which will be approved in the budget package. The nickname that suits him better is perhaps "The Law of Concealment." A government that relies on a majority of 64 Knesset members could have led countless vital reforms, such as raising the retirement age for women (which was done in the previous government). In practice, in most cases, it has succumbed to pressure groups – such as that of the large importers, those who are currently raising prices (more on this later).
The relevant Knesset committees are the Finance Committee, the Economy Committee and the Health Committee stepped up a gear this week in order to deal with dozens of items ahead of the final approval of the budget. Along the way, they discovered that the most elegant method is to escape responsibility. Or maybe they just can't handle, in just a few weeks, the plethora of challenges.
These include supervision and enforcement of public transportation, amendment to the Water Law, reduction of market power of suppliers in retail chains, permission to the Ministry of Finance for direct import of vehicles to the Government Vehicle Administration, the reform in the gas and banking sector (including information on bank customers' accounts), facilitation of fruit and vegetable imports, and more.
Some reforms have evaporated for political reasons. Others were reduced using the salami method. The government, which was authorized to deal with the cost of living, for example, pulled out of the Arrangements Law the proposal to limit the power of exclusive importers of food and toiletries.
Tourism Minister Haim Katz, who acted as a lobbyist for the hoteliers, prevented the cancellation of the VAT exemption for foreign tourists.
The cost of living regarding double health insurance has been neglected. Knesset Health Committee Chairman Uriel Bosso of Shas delayed the move to prevent double insurance for private policy holders. It is less urgent for MK Bosso to deal with an area in which Shas voters will not benefit. On the other hand, he earns the sympathy of lobbyists from insurance companies and agents.
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Haim Bibas, Chairman of the Local Government Center. His opposition to the Arnona robbery drives the Finance Minister mad (Photo: Reuven Castro)
Arnona Snatch
The establishment of the Arnona Fund, which is intended to take business property tax money from local authorities and transfer them to grants that will incentivize the authorities to build housing, has become one of the side loads of the Arrangements Law.
Haim Bibas, chairman of the Center for Local Government (Likud), strongly opposes the plans, which upsets Smotrich, who claimed: "I am not threatened. They don't work under fire with me." The finance minister's interest is clear; he cares about his constituents beyond the Green Line.
But those who are really threatened are the heads of the local authorities, who have come out against the reform that is supposed to fund the fund. At the height of the operation in Gaza, shelters and missiles had to be evacuated to fight for their position. Just before the final explosion, Moshe Gafni decided to intervene and try to bridge between the sides.
The Tax Authority sought to take advantage of the law to eliminate distortions and increase tax collection by landlords.
The honey was that landlords of one apartment would enjoy a tax exemption on rent of NIS 7,500 per month instead of NIS 5,471 until now. Another indulgence is the possibility of tax deduction of landlords for apartments they rent themselves.
But the sting has not yet been confirmed. This involves imposing a reporting obligation to the Income Tax on anyone who rents out his apartment, even if he enjoys an exemption from paying tax. In addition, the proposal to cancel the indexation of the tax exemption has not yet been approved, so that it will erode over the years.
In one area, however, we saw reform: this week the government approved a pilot project for the construction of the Israel Electric Corporation's storage facility at an investment of NIS 110 million, designed to ensure kosher electricity. The experimental facility will be built, you guessed it, in Bnei Brak, which is the world champion in kosher electricity consumption.
In order to advance the move, it will be necessary to change the law and authorize the municipality to expropriate private land. Despite the denials, the move could come at the expense of electricity tariffs for all consumers. They promised that the facility would be sold to private developers within three years. It's not clear to me why the Electricity Authority hasn't insisted that the facility be built by private developers now. Gaffney and his gang have the solutions.
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- Minister of Finance
- Bezalel Smotrich
- Arrangements Law
- Finance Committee
