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The Israeli cabinet voted for tax hikes and budget cuts in a new austerity package.
The Israeli cabinet voted 20-9 in favor of austerity measures, Haaretz reported. The plan includes cuts in the state budget and an increase in taxes. It was widely assumed that the Defense Ministry budget would stay the same, but even that was hit with budget cuts.
Under the reforms, the Value Added Tax will rise by one percentage point to 17 percent, the Jerusalem Post reported.
The cabinet also voted to raise income taxes by 1 percent for people who earn 8,881 shekels ($2,198) a month. And taxes on salaries over 67,000 shekels a month will rise by 2 percent, Reuters reported. Income taxes in Israel generally range somewhere between 10 an 48 percent.
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Prime Minister Benjamin Netanyahu said the measures are “harsh" but necessary, the Post reported.
“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,” Netanyahu announced.
But Yesh Atid party leader Yair Lapid criticized the cuts. “The Prime Minister just discovered last week that Israel was facing a crisis, but his gigantic and wasteful government continues to burden citizens with an exhausting bureaucracy that costs billions,” Lapid told Arutz Sheva.