May 27--"I am not an economist. A finance minister does not have to be an economist, but someone who knows priorities and who fights for the right priorities," said Minister of Finance Yair Lapid at the Israel Bar Association conference in Eilat on Tuesday. "I was recently asked a legitimate question that I apparently learned economics at the people's expense in the past year. That is true, but I understand more about economics and I'll know more in another year."
Lapid told moderator Dr. Yoaz Hendel, "Unexpectedly, most of my mistakes were in communicating, because when people think that the economy is in bad shape, they're upset." He added, "One of my decisions was that if I'm wrong, I'll fix it myself, and one of the best examples of this was cancelling the hike in income tax brackets. We planned to raise taxes, but when the time came, I realized that there was no need for it, and I cancelled it, despite the criticism for vacillation."
Asked about his differences with Governor of the Bank of Israel Dr. Karnit Flug over the need to raise taxes to meet an expected NIS 18 billion budget shortfall, Lapid, who opposes a tax hike, said that the budget deficit was structural, but that there were different perspectives on how to deal with it. "The Bank of Israel's numbers are inaccurate. There is always a gap between income and expenditures. That's fixed. When I took up office, the deficit was NIS 35 billion, and you're always fighting over the gap. In any case, the numbers of the gap and the deficit are not final. The Bank of Israel has itself changed its growth forecast four times in the past six months. The decision on how to cover the gap is a matter of my world-view.
"My world view says that the Israeli public is mostly concerned about its disposable income. We must not raise taxes and the deficit should be handled in other ways. We're taking several measures to boost revenues, including combatting black capital, which is at its height. There will be discussions of the deficit and expenditures. People want to know that their disposable income won't be harmed and that is the Ministry of Finance's current world-view. It's a different perspective from Flug's, and it's OK for the governor and I to think differently."
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