It must now be understood that the global economic crisis is not only not recovering, it is worsening, and as it worsens, we must take additional steps to protect the Israeli economy and Israelis’ jobs.

 Cabinet communique

 

Israel Cabinet meeting (Reuters archive photo)

(Communicated by the Cabinet Secretariat)

At the weekly Cabinet meeting today (Monday, 30 July 2012):

1. Prime Minister Benjamin Netanyahu made the following remarks:

"For the past three years, we have been in a global economic crisis, and we have succeeded in maintaining the Israeli economy during this crisis and in protecting jobs in Israel; in this we are exceptional. It must now be understood that the global economic crisis is not only not recovering, it is worsening, and as it worsens, we must take additional steps to protect the Israeli economy and Israelis’ jobs. Today, we will submit steps that are designed to do so.

I emphasize that Governments that did not act in time, did not take determined action, and did not act responsibly, caused great harm to their people, both in terms of mass unemployment and in terms of crumbling social systems. We will not allow that to happen. I will not allow that to happen. We need to act responsibly, with determination and in time.

And so we are submitting steps that, even if they are measured, are harsh. We are talking about raising income tax by 1%, mainly on the upper and middle classes. We are talking about surtax on the very wealthy. We are talking about 0.5% tax on employers and a 1% increase in VAT. This is not easy. This is not impossible. It is not easy and it requires determination and I can tell you: This demands courage from a collective leadership. I ask ministers to show this responsibility and determination in order to continue protecting the Israeli economy.

We will exact more from those who have more; we will exact less from those who have less. But we will not hurt any of those actions we have taken to lower the cost of living. Close to 300,000 families will still receive NIS 800 a month for free education which starts in another two weeks. Hundreds of thousands of families, close to 400,000 families, will receive hundreds of shekels in tax credit points.

When I consider what we have done in the cellular telephone reforms and, in free dental care, we are talking about hundreds of shekels that are going into citizens’ pockets in order to make things easier. However, I do know that these steps are not simple. They are not simple, but they are necessary, measured and urgent in order to protect the Israeli economy and jobs in Israel. This is what a responsible government does.

There is debate. There is a lot of populist criticism that it is possible to spend and spend without coverage and without account. This is how one reaches a collapse like in several European countries. We will not go there. We will maintain the Israeli economy and Israelis’ jobs."

Finance Minister Yuval Steinitz made the following remarks:

"As the Prime Minister pointed out, for three-and-a-half years, we have been fighting to defend the Israeli economy and Israeli citizens, and we will continue to show courage, responsibility and determination in order to do this. In all that we have done, the most socially important thing that we have done is instead of creating 150,000 jobs, over these three years we have created 330,000 new jobs, avoided mass unemployment and a 12% drop in average household income as in the US and more than a few European countries.

In order to continue this, we must prove that we will meet the new deficit target and maintain the State of Israel’s good image as an island of economic stability and place for investment. This is not only for the economy – it is for the people. We see what is happening to people in Spain, Greece, the US and Europe – and we will watch over Israel’s citizens."

2. The Cabinet decided on a series of steps to reduce the deficit, deal with the effects of the global economic crisis on the Israeli economy and change the order of priorities in the budget (continued handling of the infiltration issue, reform the fire and rescue service and home front emergency preparedness). In the framework of its decisions, the Cabinet also passed decisions on the following issues:

  • The war on black capital;
  • Stepping up enforcement of tax laws;
  • Reducing the scope of tax evasion in Israel;
  • Improving and upgrading tax collection in Israel;
  • Corrections in the law on the excise on fuel;
  • Improving data collection and reporting to the tax authorities;
  • Shortening the legislative process for the 2012 Law on Encouraging Capital Investments; and
  • Implementing a package of steps to deal with the global economic crisis and change the order of priorities in the budget.

3. The Cabinet approved draft traffic legislation and authorized the Ministerial Committee on Legislation to approve the final draft and submit it to the Knesset.

4. Pursuant to Article 23 of the 1959 State Service Law (Appointments), Cabinet decided to approve the appointment of Dalia Zilber as Director of the Jerusalem District of the Interior Ministry.