Coalition Split on Regulatory Reforms Could Imperil State Budget

For those hoping for an early demise of the Bennett-Lapid government, there was encouraging news on Thursday as a split emerged over Finance Minister Avigdor Liberman’s deregulatory plans, according to The Jerusalem Post.

Dissension cropped up in the Labor and Meretz parties, which sent a letter to Liberman on Thursday urging removal of the proposed reforms from the Economic Arrangements Law, an adjunct to the state budget.

Liberman claims that his plan would significantly trim the bureaucracy and save the economy 7 to 8 billion shekels a year.

However, the plan entails the creation of an anti-regulatory authority, which would reduce regulations in existing agencies. Labor and Meretz objected, saying that this would add another layer of officialdom and interfere with the workings of the government, and the smooth maintenance of regulatory procedures already in place.

“In addition, we believe the proposed format will miss its target and will add additional challenges to the process of improving regulation and removing the regulatory burden, effectively creating new excessive regulation and bureaucracy,” they wrote.

The coalition must be pass a new budget in November or risk new elections. Just how much the debate imperils passage was not clear, but coalition chairwoman Idit Silman and alternate chairman MK Boaz Toporovsky called for all sides to reach an agreement, rather than finding out the hard way if they have sufficient votes in November.

Meanwhile, Justice Minister Gideon Sa’ar succeeding in deleting the requirement to report taxes on rental income that would in any case be exempt from tax.

Current regulations say that rentals bringing in less than NIS 5,070 per month are exempt from income tax, and the owners don’t have to report the income. The new budget would compel reporting.

“The Tax Authority’s proposal to require taxpayers to report amounts that are in any case tax-exempt under the law was an unnecessary hassle for Israeli citizens,” Sa’ar wrote on Twitter.

“It also had the potential to raise rental prices in the housing market. Therefore, it has been removed from the Arrangements Law at my proposal and with a broad consensus in the Ministerial Committee.”