Labor Party leader Shelly Yacimovich made headlines on Monday with a novel austerity plan — this one for politicians.
Yacimovich said that the policy of automatic annual pay raises for MKs and ministers should be ended.
“While senior government officials’ pay increases automatically, most of the public’s salary has remained low and even decreased,” Yacimovich said. “Increasing [MKs’ and ministers’] salary according to increases in the national average salary is a privilege that the vast majority of the public does not enjoy.”
“Ministers and Knesset members were never crowned as kings,” Yacimovich told Finance Committee Chairman Moshe Gafni and House Committee Chairman Yariv Levin. “Elected officials should serve as an example instead of living in a separate reality,” she said.
Their wages are updated according to the average national salary, which means that when the average rises, their salaries go up too. But since most people who are laid off in the country are low-paid, a situation arises in which mass layoffs cause the national average salary to go up. This results in the unattractive paradox deplored by Yacimovich, in which the more low-paid workers lose their jobs, the more money government officials take home.
Senior government officials are anticipating their regular salary increase on Tuesday. If the Finance Committee approves it, the income of the president, Knesset members and judges will rise by 3%, while that of the prime minister, opposition leader, ministers and deputy ministers will go up 2.5%.
While rival politicians might hesitate before criticizing Yacimovich’s wage freeze idea, Finance Minister Yuval Steinitz did not hesitate to denounce her overrall economic program on Sunday, terming it a “plan of economic destruction” that would turn Israel into another Spain.
“Take Shelly Yacimovich’s plan, put it in place, and the Israeli economy will look like Spain’s and even worse,” Steinitz said in an interview with The Jerusalem Post. “Those naive suggestions will ruin the Israeli economy.”
For example, Steinitz rejected the Labor leader’s proposal for an increase in the corporate tax rate to 30 percent. He said that if multinationals like Intel and Teva are stripped of incentives which allow them to pay taxes as low as 6-12% on business activities in the country’s periphery, they will stop investing and “some of them will even leave the country in two to three years.”
The current corporate tax rate is 25%, but companies working outside the major population centers get additional tax breaks.
Steinitz also took Yacimovich to task for comitting herself to expenditures of around 140 billion shekels, saying that he could not recall any responsible Israeli leader making such extravagant promises during an election campaign.
Steinitz and Netanyahu are headed in the opposite direction. Steinitz acknowledged that the next government would need to cut around 14 billion from the 2013 budget, but refused to elaborate on where the cuts would be made, except that there are “several possible alternatives.” He said he preferred not to enter into details at this juncture, since as the specific spending cuts would be “up to the new government to decide.”
“I can only say that there were similar cases in the past decade, and at the end of the day we found the right way how to make those cuts,” the finance minister said.
He did not rule out higher taxes. “As it seems, we will not have to place tax hikes, and if we do need to it will be minimal,” he said. “But … we will have to wait and see what developments there are, what revenues we collect from trapped profits.”
As proof of the Netanyahu government’s concern for the economic struggle of ordinary Israelis, Steinitz promised that if Likud-Beiteinu wins, it would ensure legislation to curb economic concentration. If passed, the law would require separation of financial and non-financial holdings by prohibiting control of financial institutions by large non-financial corporations.
Meanwhile, polls showed Likud-Beitenu continuing to lose ground. The 34 seats it took in a recent Smith Research poll for The Jerusalem Post and Globes was its lowest number so far. Likud and Yisrael Beiteinu, which currently hold a combined 42 seats in the Knesset, have slid from 36 seats a week ago, 39 two weeks ago, and 46 mandates when the parties were separate and at their peak in August. Two other polls released late last week also found that Likud-Beiteinu had dropped to 34 seats.
A Likud MK attributed the slippage to complacency. He said that Likud was not campaigning enough because Netanyahu’s re-election was assured by all the early polls.
“He thought we could win without a campaign,” the MK said. “Now we woke up late, and we are being attacked on all sides.”
Likud’s attack on Jewish Home party leader Naftali Bennett for saying his conscience would not permit him to evacuate Jews from their homes in Yehuda and Shomron seems to have backfired, alienating right-wing support.
Jewish Home, which won only three Knesset seats in 2009, has risen from 10 to 11 seats to a projected 11 to 14 over the past two weeks. Surprisingly, a large component of the party’s support is coming from secular Israelis, even though its candidates are national religious in orientation. That apparently has to do with the youthfulness of its candidates, and Bennett’s successful high-tech background.
The same poll predicts 18 seats for Labor, 11 for Shas, 10 for Yesh Atid and the Tzipi Livni Party, six for United Torah Judaism, four for Meretz, Hadash and Balad, three for the United Arab List, and two for Am Shalem.