The Cabinet Monday evening passed a two-year budget, nearly five months late, with tax hikes and across-the-board cuts in spending, Only one minister voted against the budget, the second and last time it will cover two years instead of one.
Finance Minister Yair Lapid, who is chairman of the Yesh Atid party, said after the vote that the budget is “first stage in changing peoples’ lives in Israel.”
The Value Added Tax on most goods, except food, will rise from 17 percent to 18 percent. Income taxes will rise for upper income families, and ministries will have to get by with last outlays, meaning cuts in services.
Bank of Israel Governor Stanley Fischer announced a surprise quarter-point cut in the interest ate Monday night, two weeks ahead of the end-of-the month decision n whether to change the rate for the following month. He also praised the new budget, which could lead the country out of a huge deficit that has mounted in the past three years following several years of a surplus.