Israel Targets 14-Month State Budget to Be Approved by November

A sign points the way to the Israel Tax Authorities offices in Yerushalayim. (FLASH90)

Finance Minister Avigdor Liberman said on Tuesday he is aiming for a 14-month state budget to be approved in November and that he planned to adopt international standards, such as a 15% corporate tax rate.

Liberman said passage of the budget, covering the last two months of 2021 and 2022, will be “very hard” given the coalition’s narrow majority in the Knesset.

“We will pursue a very responsible state policy without cuts, without taxes, but first and foremost a responsible policy. We won’t go crazy with all the political pressures,” he said at the annual Eli Hurvitz economic conference.

Bank of Israel Governor Amir Yaron told the conference that in light of the gradual exit from the coronavirus crisis, “it is advisable not to raise taxes in 2021 and 2022, but it is important not to increase the structural deficit” that had accumulated in recent years.

Yaron’s predecessor Karnit Flug said that while higher state revenue is needed, “we can do the same things by abolishing [tax] exemptions that have no economic or social justification.”

Israel is still using a pro-rated version of the 2019 budget that was approved in March 2018.

By law, a new budget must be passed within three months but the Knesset plans to vote to delay final approval to 140 days. Lieberman said that the chagim in September, during which government offices are largely closed, will make passage difficult any time soon.

“My policy is clear – growth, employment, economic efficiency and a safety net,” he said, noting he plans to invest heavily in large infrastructure projects.

One of his first decisions has been to end jobless benefits to those on furlough up to age 45.

He called on the private sector to invest more in Israel rather than abroad and said it was important for Israel to adopt international standards.

“We saw in discussions of the G-7 and G-20 the desire, or the decision, to have a uniform tax on all international corporations of at least 15%. We will adopt this,” he said, adding that he favors a similar adoption of a carbon tax.