Cracks are emerging in Finance Minister Avigdor Liberman’s budget plan, with the potential to derail the budget and send Israel back to an election.
Opposition is building to a proposed reform in the Economic Arrangements Law that accompanied the budget to reduce regulation and bureaucracy in government offices. Ministers from the Labor and Meretz parties sent a letter to Liberman on Thursday asking the reform to be removed from the agenda. Liberman has said the plan would streamline bureaucracy for citizens and the government, and save the economy between NIS 7 billion and NIS 8b. a year.
However, Labor and Meretz said the creation of another government regulatory authority to cut down on regulation would interfere with the fundamental workings of the government, and make it more difficult for officials to pass and implement regulations.
“In addition, we believe the proposed format will miss its target and will add additional challenges to the process of improving regulation and removing the regulatory burden, effectively creating new excessive regulation and bureaucracy,” they wrote.
Meretz MK Yair Golan spoke more harshly against the reform.
“The establishment of the regulatory authority is a bad idea devised in the dark by members of the [right-wing] Kohelet Forum,” Golan said on Twitter. “Reducing bureaucracy, economic freedom and a free market are empty slogans that cover its real goal – to eliminate the welfare state.”
Challenges to the regulatory reform could create a coalition crisis. When the Knesset resumes in October, it will have to approve the budget in three readings by November 4 or the government will be automatically dissolved. Every vote in the 61-member coalition will be needed to pass the budget, but Yamina’s Abir Kara has said he would not vote in favor if the regulatory reform is taken out.
Coalition chairwoman Idit Silman and alternate chairman MK Boaz Toporovsky called for all sides to reach an agreement.
“Over the years, changes have always been made to the arrangements and budget laws before they were put forth in the Knesset,” they wrote. “Reaching agreements is necessary in order to place the budget and the law of arrangements on the Knesset table properly in a way that will be supported by all the coalition factions.”
Meanwhile, the Ministerial Committee on Legislative Affairs approved the controversial agriculture reform legislation in preparation for the first reading in Knesset. Farmers have been protesting this measure in the streets, saying the reforms will destroy the livelihoods of thousands of farmers and agriculture workers, with no impact on the cost of living.
As part of the reform, which is designed to increase competition and lower the prices of fruits, vegetables and eggs through a broad and gradual reduction in import tariffs, it was agreed to open the poultry industry to competition, while providing financial assistance to the growers who have been involved in the industry until now. This will help to streamline the poultry industry and convert caged coops to free ranges.
Earlier this week, the Tourism and Transportation ministries proposed an alternative employment model for the thousands of tour guides who have lost all means of supporting themselves during the pandemic, and no longer receive government benefits. The plan proposed offers guides o work on public transportation routes policing riders not wearing masks and offering other help.
However, tour guides are not so enthusiastic about the idea.
“We at Moreshet Derech – The Incoming Tourist Guide association welcome any opportunity that offers work and income to our members,” said Elena Drubachevsky, a tour guide and activist on behalf of the industry, which has been one of the worst affected by the pandemic. “But for many, this is not a realistic solution since many of the younger guides (under 45) have young children at home and cannot go out to work the long shifts with minimal pay that will not cover the babysitter. It is limited to only 400 jobs and has not yet started, leaving us without any income since March 2020 or compensation since July 2021. We are desperate since many are still paying back loans, business expenses, mortgage and other debt and desperately need solutions now.”
Also on Thursday, a clause in the Economic Arrangements Law that accompanied the budget regarding reporting taxes on rental income was removed at the behest of Justice Minister Gideon Sa’ar.
According to current regulations, rentals bringing in less than NIS 5,070 per month are exempt from income tax, and the owners don’t have to report the income. The Economic Arrangements Law would have required such income to be reported to the Israel Tax Authority, even if it remained tax-exempt. However, Sa’ar argued, that would have caused more trouble than it was worth.
“The Tax Authority’s proposal to require taxpayers to report amounts that are in any case tax-exempt under the law was an unnecessary hassle for Israeli citizens,” Sa’ar wrote on Twitter. “It also had the potential to raise rental prices in the housing market. Therefore, it has been removed from the Arrangements Law at my proposal and with a broad consensus in the Ministerial Committee.”
Israel has not had a budget for more than three years, and the Economic Arrangements Law that has been put forward is possibly the most ambitious and complex document of its type ever, with dozens of new and wide-reaching reforms.
Blue and White MK Eitan Ginzburg told Army Radio on Thursday that he thought the Finance Ministry’s budget plan was trying to accomplish too many things too quickly, without sufficient public debate.
“The Finance Ministry is trying to bring in a lot of reforms that it cannot,” Ginzburg said. “We are not ready for the Knesset to run and pass the law just as the Treasury wants. They need to know that they need to talk to the Knesset.”
Separately, a new law went into effect on Thursday that requires banks to give customers a day’s notice before returning a check for insufficient funds. This will give customers advance notice and allow them to address the issue before a check bounces and causes problems between the customer and the depositor.