Finance Minister Yair Lapid’s new housing plan may not have much more prospect of passage in the Knesset than the original version, as the range of opposition this week shows.
After Finance Ministry legal advisors worked out a compromise with the Attorney General’s office to circumvent charges of discrimination in the proposed VAT exemption for house buyers excluding those who haven’t served in the army — namely chareidim and Arabs — they were immediately met with renewed opposition not only from those groups but also from key Knesset members.
A key opponent is Housing Minister Uri Ariel (Jewish Home), who declared emphatically that he would personally see to it that Lapid’s proposal is blocked.
The compromise plan, which now provides for negligible benefits for chareidim, “is not acceptable, and will not be,” Ariel told the Knesset Finance Committee on Monday.
Ariel said that the provisions must be made more equitable. As it stands, those who served in the IDF will be eligible for the exemption on homes worth up to 1.5 million shekels, whereas those who have not will only be eligible for the purchase of homes up to NIS 600,000 (roughly $170,000) in value.
As has been noted, such new apartments available from building contractors, which is what the exemption covers, are almost non-existent at that price. Chareidim and Arabs will still effectively be excluded.
United Torah Judaism MK Rabbi Meir Porush attacked Lapid’s cynical use of military service to once again deprive chareidim of government benefits. While he offers tax breaks to former IDF soldiers, he is at the same time refusing to approve vitally needed funds for the military. Earlier this week, Defense Minister Moshe Yaalon said that the Finance Ministry’s tight-fistedness is undermining the IDF’s training and fighting capabilities.
Support for the chareidim is coming from unexpected places too, from politicians not known for their sympathy for chareidi interests.
MK Zehava Gal-On (Meretz) dismissed the VAT exemption scheme as a “bluff,” and asked, “Why should they [chareidim and Arabs] be discriminated against?”
She was joined by MK Erel Margalit (Labor), a well-known figure in Israeli business circles. “The zero-percent VAT plan is discriminatory, and should not be implemented,” he said.
Legal experts are also skeptical about whether the revised plan can withstand the scrutiny of the courts. Initially, when those who have not served in the army were excluded from the exemption altogether, doubts were expressed about its constitutionality. The revision, which rests on what amounts to a market fiction — the non-existent housing — may not fare much better.
The Jerusalem Post derided the revision as “a feeble attempt to get around the High Court’s inevitable rejection of the plan due to its discriminatory nature.”
It recommended that “Lapid should cut his losses now and scrap his VAT plan. It makes no economic sense. Instead of lowering prices, it will jack them up; instead of cutting red tape and bureaucracy, it will generate more; and instead of helping the two fastest growing populations in Israel who suffer most from the ongoing housing shortage, it discriminates against them. The plan is lacking from nearly every possible perspective: socially, economically and democratically.”
In addition, the controversy is fueled by an ongoing conflict between Lapid and Ariel regarding a solution to the housing shortage.
Ariel advocates investing in pre-existing projects to increase the safety of bad neighborhoods, and make cheaper real estate more attractive, while Lapid wants to revive Israel’s troubled public housing program, Calcalist reported on Tuesday.
Political issues further complicate the picture. Lapid frequently accuses the Housing Ministry of pouring money into Yehudah and Shomron “under the table” — despite the fact that a detailed accounting has been published, on at least one occasion, by Globes.
For its part, the Housing Ministry on Tuesday accused the Finance Ministry of unconscionable delays in using its public housing budget.