08/08/2004 Finance Minister Benjamin Netanyahu announced Sunday that the 2005 state budget will be cut by around NIS 6 billion, with NIS 1.5 billion alone coming out of the defense budget. Netanyahu told reporters at a press conference in Jerusalem that he believes the economy is moving in the right direction and is pulling out of the recession it has been in for the last 18 months. Netanyahu is proposing an across the board four percent cut in all ministerial budgets. The defense budget will be slashed by NIS 1.5 billion under Netanyahu’s proposed budget, though the Defense Ministry is actually demanding an additional NIS 1.5 billion be added to its budget.
The finance minister said that following the fall of Saddam Hussein’s regime in Iraq, Israel now faces smaller threats, thus enabling a cut to the defense budget. „Cutting the defense budget is preferable to cutting the budgets of the other ministries which have been through difficult times in recent years,” he said. The main points of the proposed budget include: * increasing financial assistance to the elderly * cuts to National Insurance Institute benefits and toughening criteria for qualifying for benefits * increasing monies to the education system and funding the planned reforms * increasing the medications included in the basket of health services * annulling the value added tax exemption in Eilat * increasing water tariffs * revoking the cut in fees for first-degree university students * increasing public transport fees for the under-16s. Netanyahu proposed a budget of close to NIS 267 billion. The 2005 budget will also revoke NIS 2.5 billion-worth of tax exemptions. Netanyahu also proposes capping salary rises for the public sector to NIS 2 billion for next year – half the sum agreed upon with the Histadrut labor federation in 2003. „This matter will have to be resolved through negotiations with the Histadrut and I am certain that it will exhibit national responsibility and agree to the offer,” said the minister Sunday. Histadrut chief Amir Peretz said in response that Netanyahu is violating the public sector wage agreements. „We have no intention of turning the public sector into [Netanyahu’s] punching bag. We won’t let him harm the advanced training funds [keren hishtalmut],” vowed Peretz. The Histadrut chief alleged that Netanyahu presented the budget in its coming form to scuttle coalition government talks between the Likud and Labor parties, which have recently stalled over the Labor Party’s demand that they be included in drawing up the 2005 state budget. BPI-info
