F-16i Israel news photo: Flash 90

Israel's security cabinet was to discuss on Sunday proposed cuts in defense spending of over a billion dollars, as part of Finance Minister Yair Lapid's austerity plans which include tax hikes and cuts to public services.

Lapid wants a cut of four billion shekels ($1.12 billion) to help plug a budget deficit expected to be capped at 4.65 percent of gross domestic product this year and three percent in 2014.

To meet his targets, AFP reported Sunday, he has proposed an increase of 1.5 percentage points in personal income tax, one point in corporate tax and a one-point rise in VAT, together with a cut in family allowances.

In an attempt to cushion opposition to such unpopular measures Lapid is seeking to slash the defense budget which, including salaries and pensions, currently makes up eight percent of GDP, according to central bank data.

In the past the defense establishment and the military industries have blocked such plans and, in fact, won supplements to spending.

In 2012, for example, the budget passed by parliament was 55.5 billion shekels, ($ 15.5 billion) including annual US military aid of some three billion shekels. Final spending for the year hit 60.5 billion shekels ($16.9 billion, 13 billion euros).

For 2013 and 2014, defense bosses have decided to again seek to foil the treasury's plans.

According to media reports they want several hundred million dollars extra for their five-year equipment purchase program.

"In the event of war, politicians who cut defense spending will bear the responsibility," IDF Radio quoted unnamed military officials as saying.