(Updates with Steinitz quote in third paragraph.)
Oct. 4 (Bloomberg) -- Israeli Finance Minister Yuval Steinitz said he is optimistic that the government will get the Cabinet to approve the proposals of a panel on reducing the cost of living after failing to garner enough support yesterday.
The panel, appointed by Prime Minister Benjamin Netanyahu in response to protests over consumer and housing prices, proposed that corporate taxes be set at 25 percent next year and 26 percent in 2013. They were 24 percent this year. It said the top rate of personal income tax should be raised to 48 percent and that the country must increase its stock of affordable housing and open its markets to more imports.
“The government will not miss the opportunity to make this correction,” Steinitz said at a conference today in Tel Aviv. The Cabinet meets again next week to discuss the proposals.
Netanyahu tapped the panel, led by economist Manuel Trajtenberg, to come up with proposals after mass street protests across the country calling for lower prices and more affordable housing. Ministers in two parties in Netanyahu’s ruling coalition, Foreign Minister Avigdor Liberman’s Yisrael Beitenu and the religious Shas faction, have objected to the report.
“I don’t see here any real solutions to the problem of poverty in Israel,” Minister of Tourism Stas Misezhnikov of Yisrael Beitenu told Army Radio yesterday. “This won’t solve the housing problem, won’t solve the problem of indirect taxes and won’t bring funds flowing into the Education Ministry.”
The Histadrut Labor Federation also criticized the recommendations, saying they fail to address the issue of contract workers. Israel’s largest union said it planned to announce the start of a work dispute on Oct. 11, the first step toward a strike.
The tax increases would raise 30 billion shekels ($8 billion) over five years and the money should mostly be spent on education, the panel said when it presented its recommendations on Sept. 26. It also proposed cuts to the defense budget.
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