Tourists spared from budget hike
Israel’s cabinet passed a new state budget on Tuesday – and the dramatic eleventh-hour changes will have an unusually strong impact on Diaspora Jews.
The government planned to impose value added tax on hotel stays and other costs faced by foreign tourists that are currently exempted. Given that VAT is 17 per cent and due to rise, it would have hit Diaspora Jews – the most regular visitors to Israel – hard.
However, in the stormy all-night discussions before the budget’s approval, the Tourism Ministry successfully argued that the measure had to be cancelled.
“An increase in prices would have hurt the incoming tourism industry and revenue to the economy and it would have resulted in a loss for the state,” said Tourism Ministry director-general Amir Halevi.
Uzi Landau, Minister of Tourism, commented: “The government has made a responsible decision – not just for the 200,000 people employed in the tourism industry, but also for the economy itself.
“I fought because the fight was justified, because I was not prepared to accept a situation in which thousands of workers would be sent home, and because I fully believe in the power of tourism as an economic growth engine for the country.”
But while the budget was good news for foreign visitors and the tourism employees, few Israelis had cause for celebration.
It was an austerity budget, with finding cuts across ministries including an $830 million cut to the defence budget, hikes in income tax and reductions in child benefits, and a rise in corporation tax.
Thousands of Israelis took to the streets on Saturday night to protest the budget that the government went on to approve, in what appeared to be a restarting of the social protests launched in 2011.
At the largest demonstration, which took place in Tel Aviv, there were an estimated 10,000 people.
Much of the anger was directed at Finance Minister Yair Lapid, who built his political appeal by showing sympathy with the social protestors.
Lapid hit back at criticism declaring, after its passing, that the budget will be good for Israel. “The passage of the 2013-2014 budget is the first stage in a change of Israelis’ lives,” he said.
But opposition parties reacted with disbelief, and Opposition Leader Shelly Yachimovich of Labour described the budget as a “”slap in the face” to the public.
NATHAN JEFFAY
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