Steinitz Presents 'Very Different' State Budget

Finance Minister Yuval Steinitz presented the 2011-2012 state budget - and said it was significantly different than recent ones.

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David Lev, | updated: 07:07

Yuval Steinitz
Yuval Steinitz

The government will spend NIS 550 billion over the next two years on the country's domestic and security needs, if Finance Minister Yuval Steinitz has his way; that is the sum of the state budget for 2011-2012 that he presented at a news conference Tuesday morning, along with top Treasury officials. And, according to the Finance Minister, this budget is going to be very different from any in recent memory.
Steinitz said that his budget was perhaps the most socially-conscious one in Israel's history. Expenditures on security were cut and redirected much to social programs.

Speaking Tuesday at the news conference, Steinitz said that his budget was perhaps the most socially-conscious one in Israel's history. Steinitz said that for the first time the Treasury had been able to stem the ever-growing expenditures on security and redirect much of the money to social programs, especially for elementary and higher education, and employment and training programs. Education expenditures, according to the budget, will climb by NIS 1.5 billion.

In addition, hundreds of millions of shekels have been allocated to day-care centers to enable more women to work, and for the negative income tax program, which enables poor families to receive income tax credits. Increases were also allocated for investment in industry and hi-tech, and for  improvements in transportation, a sector which alone will receive NIS 2.5 billion in increased funding.

Another major improvement in the next budget, says Steinitz, will include a significant reform in the way corporations are taxed in Israel. Corporate tax rates will fall significantly, “making Israel one of the most tax-friendly countries in the West for businesses,” Steinitz said.

Steinitz said that the financial crisis that began two years ago has still not completely passed from the world. “The storm is still raging, and when the world is stormy Israel gets wet.” Appealing to MKs to accept and approve the budget as it stands, Steinitz said that the Treasury was facing many problems not of its own doing, and that economic unity was needed at this time. “The world economy is quaking, and we must remain on guard to ensure Israel's interests,” he said.

The Knesset is likely to vote on the budget on its first reading next week, after which it will be sent back to committee for adjustment. Steinitz said he had tried to ensure that all social and economic interests would be covered, and all resources allocated as fairly as possible – in order to enable all parties in the Knesset to support it.

But not all politicians agreed. MK Moshe Gafni (UTJ), chairman of the Knesset Finance Committee, and therefore in a unique position to impede approval of the final version of the budget, lashed out at it Tuesday, saying that it sought to cut taxes for the rich, while freezing transfer payments for those in need. Speaking at a Knesset meeting on World Poverty Day, which, ironically, was being commemorated on Tuesday, Gafni said that the budget “once again shows how the government helps the rich, while cutting funding for the poor. I see opposing the budget as a part of the struggle against the increasing income gap in Israel.”

Gafni can count on help from Kadima, which on Tuesday slammed the budget. “The only ones profiting from this budget are the special interests and partners of the coalition,” Kadima said in a statement. “This is a bad budget that continues the typical behavior pattern of the administration of Prime Minister Binyamin Netanyahu – survival at all costs. It is a budget without vision or new ideas, with a set of twisted priorities that presents a message of defeat to young couples, the homeless, and residents of the periphery.”

MK Uri Orbach (Jewish Home) said at the meeting that Israelis were largely unaware of the problems of poverty in society – and that he intended to so something about it. “Voters and decision makers are exposed in the media to the top 100 wealthy or influential people in the country, but they don't know who the poor are.” Orbach, a former reporter, said that when he leaves politics and returns to his job in the media, “I will begin a special supplement describing the 100 poorest Israelis, to show the true face of Israeli poverty. Then the decision makers and voters will understand how deep the problem runs,” Orbach said.