JERUSALEM \u2014 The Israeli government approved a two-year austerity budget early Tuesday that would cut spending and raise taxes, outraging many Israelis who voted in a new government this year after promises of economic relief.<\/p>\n
Yair Lapid, Israel\u2019s new finance minister, in Mr. Netanyahu\u2019s office on Monday for discussions on spending measures intending to help close a $10.5 billion budget deficit.<\/p>\n
Even before the new government\u2019s first budget was approved, 12,000 Israelis took to the streets Saturday night in a show of anger reminiscent of the vast social protests that rocked the nation in the summer of 2011. At that time, record crowds complained of the high cost of living \u2014 and eventually many voted their cause and expected the new leadership to respond.<\/p>\n
Instead, the government announced that a large deficit required higher taxes and less spending.<\/p>\n
The austerity measures are intended to help close a 2012 deficit of about $10.5 billion, which was 4.2 percent of the gross domestic product and double the amount that had been projected.<\/p>\n
\u201cToday, given the State of Israel\u2019s national needs and the global economic crisis, it is important for the State of Israel to show that it is passing a budget,\u201d Prime Minister Benjamin Netanyahu said on Monday at the start of the cabinet meeting. He announced that a compromise had been reached on the fiercely contested military budget, cutting it by $840 million.<\/p>\n
But because voters had demanded a different budget blueprint, anger was focused less on Mr. Netanyahu, whose previous government created the deficit, than on Yair Lapid, the political rookie and former television host, who was recently elected and is now finance minister.<\/p>\n
Mr. Lapid\u2019s centrist Yesh Atid Party stunned the political establishment by placing second in the January election. Its success was widely attributed to the way that Mr. Lapid rode the wave of the social protest movement, campaigning on a slogan of \u201cWhere\u2019s the money?\u201d and championing the cause of Israel\u2019s struggling middle classes.<\/p>\n
But this budget includes, among other things, an increase of 1.5 percentage points in the personal income tax and of one point in the corporate tax. The value-added tax is set to rise to 18 percent from 17 percent, child allowances are to be sharply reduced, and subsidies for after-school programs for children under the age of 9 will be canceled. Mr. Lapid has noted that with the ultra-Orthodox political parties sitting in the opposition after being part of most government coalitions for the last three decades, financing for yeshivas has also been reduced. <\/p>\n