Instead of handing out an unprecedented NIS 13.6 billion in coalition funds, the government should invest in lowering the high cost of living by lowering Israel’s VAT (Value Added Tax) by 2%, opposition leader MK Yair Lapid charged in a press conference in Tel Aviv on Tuesday morning.
The purpose of the conference was to present guidelines for an alternative 2023-2024 budget, days before the government’s budget proposal which was “full of holes” and “zero vision,” Lapid said.
The VAT drop would cost NIS 8 billion. The government should invest the remaining approximately NIS 6 billion currently earmarked for coalition funds in growth engines such as raising human capital for hi-tech and education, the opposition leader said.
Contributing to a national budget
Coalition funds are a part of the national budget intended to fulfill political agreements that have budgetary significance. These are not part of the official budget of any government ministry. Unlike the rest of the budget, these funds are flexible and can be redirected with relative ease, as they require a cabinet decision and approval by the Knesset Finance Committee, but not an amendment to the actual Budget Law.
While Lapid did not deny the fact that his gov’t along with former prime minister Naftali Bennett spent approximately NIS 2 billion on coalition funds throughout 2021-2022, this did not exceed the average in the recent decade of approximately NIS 1 billion per year. The funds in the current budget will be over five times as high.
More importantly, Lapid said, was the difference in the purpose of the coalition funds – approximately NIS 3.7 billion of the funds in the current budget will go to haredi education and study institutions that do not include professional training, Lapid said.
Israel was the only country he knew of that paid its citizens so that they do not have to work, Lapid charged. He stressed that he respected the world of Torah and religious study, but argued that the current funds do not give young haredi men the opportunity to enter the workforce with a respectable job if they want to. The coalition funds also included hundreds of millions of shekel for “messianic initiatives” proposed by ultra-conservative ministers and Knesset members, Lapid claimed.
“A budget that intends to grow the economy needs to include training for hi-tech, incentives for the periphery, core studies in the haredi sector so that they have a toolset with which they can join the workforce and international trade agreements … all of this does not appear in the budget,” the opposition leader charged.
KAN reported on Monday evening that just before the 2021-2022 budget passed in the Knesset, Lapid, Bennett, and former finance minister MK Avigdor Liberman secretly offered two haredi Knesset members over NIS 1 billion in funding, in exchange for them voting in favor of the budget. These funds included budgeting for private haredi schools that do not teach core studies, similar to what the current coalition is doing, according to the report.
Lapid and Liberman denied the report. Lapid said during the press conference on Tuesday that he did not know of any such proposal and that the fact that the two haredi MKs voted against the budget and were not part of the government showed that the issue was not plausible, even as a “statement” against the then-opposition.
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