The Israeli government today approved a series of austerity measures, such as increasing value added tax (VAT) by one percentage point, increase of income tax and reducing the budget of all ministries, to deal with global economic crisis that affects the Jewish State, according to the EFE news agency EFE. At the end of government meeting today, Prime Minister Benjamin Netanyahu welcomed the “responsible decision” of the executive that will “protect the economy and jobs in Israel”. Next to him, Bank of Israel president, Stabley Fischer, supported the cut down on spending and raising taxes, warning that “the emergency lights were lit.” However, Defense Minister Ehud Barak said that there is a risk that austerity “would lead to recession instead of avoiding it.”
Following the decision on Monday, the VAT will increase from 16% to 17%, the income tax on average and high wages will increase by one percent, employers’ contributions will increase by 0.5%, a special tax on big fortunes will be established and budgets of the ministries for this year will be reduced uniformly by 5%. Last week, the Israeli government announced the increase of excise duties on cigarettes and alcoholic beverages.
Necessary and urgent measures in Israel
“We will demand more from those who have more and less from those who have less,” it reads a statement of the office of Prime Minister Netanyahu, who said before the government session that the measures imposed “are not easy” but described them as “necessary, moderate and urgent “. He stressed that Israel has avoided the global economic crisis and saved jobs in the last three years, but now the situation “is worse”, requiring “additional measures”.
“Governments that have not acted in time, which have not adopted a firm stance and were not responsible, have done great harm to citizens in their countries,” it said in the communique of the Israeli government, which gives the example “of what happened in Spain, Greece, USA and Europe”.
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