The Knesset voted 70-34 with one abstention today in favor of the government’s IL 123.9 billion budget for the current fiscal year. At the request of Finance Minister Simcha Ehrlich it was referred to committee which will re-submit it to the plenum later for the required final readings.
The voting was characterized by a sharp split between the two major opposition factions, the Labor Alignment and the Democratic Movement for Change. The DMC cast its 15 votes with the government coalition which also received the single vote of MK Samuel Flatto-Sharon. Kalman Kahane of the Poale Agudat Israel, a coalition partner, abstained.
The budget envisages an IL 4 billion deficit despite sharp cuts in government expenditures, including an IL I.4 billion slash in the defense budget. Ehrlich insisted that the army’s fighting ability would not be affected by the cut. He said the budget took into account the substitution of the value added tax (VAT) for the sales tax, a change that he claimed would yield double the revenue this year.
Labor Alignment economist Adi Amorai criticized the budget for its cuts in government construction. He said it would cause an economic slowdown and unemployment because the construction industry is a key factor in Israel’s economy and would exacerbate the housing shortage. But Meir Amit of the DMC, former head of Histadrut’s Koor Industries, supported the budget. He said Israel’s economic problems resulted from her desire to live like Europeans and work like Levantines.
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