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Lapid: We Knew This Would be Hard

Finance Minister says budget cuts are hard, inevitable.
By Maayana Miskin
First Publish: 5/7/2013, 2:30 PM

Finance Minister Yair Lapid
Finance Minister Yair Lapid
Flash 90

Finance Minister Yair Lapid spoke Tuesday about the planned budget cuts.

“Yes. It’s hard. We knew it would be hard, but it’s different when it actually happens,” he said.

“It’s hard, people are angry. But this is exactly what it means to take responsibility: to do what is hard, knowing that people will be angry at you,” he continued.

“Not that I’m complaining,” he said. “It’s harder for the public. But we must not let anger blind us to the truth: the other operation was the collapse of the economy, nothing less… the financial hole would have grown and grown, debts would balloon, social services would collapse.”

“When you watch television and see public squares filled with smoke in collapsed states, know that behind them were politicians who wasted money, who didn’t stand up to pressure.”

“That won’t happen on my watch,” he added.

Taxes are now hitting new sectors as well, Lapid said. “For the first time in years the Israeli middle class isn’t the only one paying the price. This time we went where nobody had dared to go before: tax on corporations, on luxury goods… “

The new Finance Ministry plan includes a 1.5% increase in income tax, which is expected to bring in more than 4 billion shekels, a 1% increase in the VAT, to 18%, and a reduction of child payments to 140 shekels per child per month.

The government will also end its subsidies for afternoon care for children aged 9, and will reduce its subsidy for dental care for children. Housewives will be required to pay health tax and national insurance institute (Bituach Leumi) payments.

Each government ministry will be required to cut their staff by 1%, and there will be no new hires until 2015. The Foreign Ministry will cut five foreign offices.