Israeli Budget Seen as 'Recommendation' Amid Fiscal Concerns

Tamar Levy-Bona, Deputy Director of Budgets for Macro and Finance at Israel's Ministry of Finance, has voiced significant concerns regarding the nation's fiscal management, particularly the tendency for the government budget to be treated as a mere recommendation rather than a binding commitment. She argues that this approach, coupled with the influence of pressure groups, leads to an unsustainable increase in benefits and tax breaks, creating "holes" in the budget and placing a heavy burden on a limited segment of the population.

Levy-Bona highlighted the tax system as a prime example, citing excessive tax benefits for localities and individuals that are not sustainable. She also pointed to the widespread, often unjustified, VAT exemptions. The core issue, she explained, is a narrow, short-sighted approach to policy-making, where individual benefits are granted without considering the overall impact on the national budget and the distribution of the tax burden. This is also evident in the subsidization of daycare and child allowances, which she believes should be primarily for working parents, not those who are not employed, due to resource limitations.

Her concerns extend to the defense budget, where she noted that the defense establishment has committed to expenditures exceeding legal limits by tens of billions of shekels. Levy-Bona criticized the notion that the defense system's needs are unique, comparing it to a health minister claiming they would have to close a ward to deal with a measles outbreak. She stressed that all systems operate under constraints and resources should be allocated based on need, not pressure.

Looking ahead, Levy-Bona warned that the next government will face significant fiscal challenges, including a potential deficit of around 5% by 2027, even before accounting for potential coalition demands or agreements with teachers. She expressed strong disapproval of the practice of opening the budget for revision multiple times, a trend she has observed for the past three years, calling it a sign of serious failure. She emphasized that if the budget is treated as a mere recommendation, Israel faces further fiscal deterioration.