Many of my friends are surprised and disappointed with the draft budget announced today, reflecting the first significant economic steps taken by Yair Lapid, the new Finance Minister.
The new measures include an increase of 1.5% in income tax, an increase of 1% in VAT to 18%, an increase in corporate tax of 1%, a reduction in various exemptions, higher taxes on tobacco and alcohol, new taxes on housing and, to top it all, a 7% increase in the budget in 2013 (bringing the deficit to well over 4% of GDP).
I don’t understand why my friends, most of whom voted for Lapid (a.k.a “the middle class messiah”), are so disappointed. During the election euphoria I repeatedly pointed out that Lapid would be no different than Bibi, and probably even worse, when it comes to tackling the budget deficit problems. Indeed I believe Lapid’s genetic predisposition, so to speak, renders him incapable of looking for the money where it really resides: the wealthy, the “tycoons”, civil servant pensions, the defense establishment, the settlements, etc. He predictably took the easy way out and, like so many before him, went back to the “usual suspects” and took from them. He promises things will be better in 2015. I guess we shall have to wait and see.
This was so predictable I sometimes wonder whether the problem is with me. Perhaps I should be looking for other friends, as the ones I have are so gullible…