Daily Israel Report

Just How Much Would it Cost to Satisfy Protesters' Demands?

Just how much would it cost the Israeli taxpayer if the government tried to satisfy all the demands by protesters?
By David Lev
First Publish: 7/28/2011, 10:52 PM / Last Update: 7/29/2011, 12:46 AM

Eini, left, and Steinitz (file)
Eini, left, and Steinitz (file)
Flash 90\

It seems to be protest season in Israel, as groups around the country, with various backers, coalesce into a movement that could have real force at the polls in a future election.

Usually, it is the hareidi-religious who demonstrate for their needs in the summer "bein hazmanim" period when they are off from yeshiva while the rest of the country enjoys what Israelis call "the cucumber season", an idiom for the lazy days of summer.

The protests that began just weeks ago with a boycott against cottage cheese have picked up steam far faster than anyone thought could happen, to the point that on Thursday, the protests for affordable living expanded to include parents of young children, who are now demanding totally free education for children up to age five.

This week, Prime Minister Binyamin Netanyahu and his government announced a wide-ranging plan to build more affordable housing, with the state reducing taxation for contractors who promise to rent out apartments at reasonable prices, and state-sponsored construction of apartments for the poor and dormitory rooms for students. Unsatisfied with that, Histadrut chairman Ofer Eini threatened a major strike next week unless “real” changes were made to the economy – and in response, Netanyahu sent Finance Minister Yuval Steinitz to negotiate with Eini.

Considering the fiscal prudence with which Netanyahu and Steinitz have conducted the government until now, observers have been somewhat surprised at how free the pair have been with money in recent weeks. Perhaps out of concern that the Prime Minister and Finance Minister are blowing the nation's budget, sources in the Treasury released a report Thursday estimating how much it would cost the state if the government were to attempt to “buy” its way out of the protests, providing funds to solve the problems protesters are railing against.

For example, the plan announced this week, if it indeed delivers the estimated 160,000 housing units needed to provide all those who seek one an affordable apartment, will cost the government at least NIS 2 billion in lost taxes and fees, as the land for rental apartments and affordable housing will be sold at a discount to contractors who promise to build affordable housing.

In addition, the plan includes another billion shekels for infrastructure development. Add to that sum billions more for affordable housing for students, as well as NIS 300 million for dormitories for students that the plan promises.

Providing free space for children in day care pre-1A and nursery school – long demanded by parents, who on Thursday took the streets as well – would cost the government a whopping NIS 16 billion, the report estimates.

Extending maternity leave to a full year, also long demanded by women's groups, would cost another billion.

And recognizing child care expenses for tax purposes, allowing deductions for day care and pre-kindergarten education (an alternative to full government funding for these classes) will cost the state NIS 7.1 billion in taxes that it will no longer collect.

And, if the government lowers the price of gas by cutting various taxes, capping gas taxes at 30% of the actual cost, the state would give up NIS 8 billion.

Last but not least, agreeing to all the demands of striking doctors will cost NIS 2.5 billion.

Altogether, the government would have to spend some NIS 60 billion if it indeed wanted to spend its way out of protesters's pressures – and with Netanyahu and Steinitz committed to keeping taxes and costs down, observers were wondering just where the money to pay for all these demands would come from.