Israeli Protesters Reject Committee Proposals to Reduce Prices

Leaders of an Israeli protest movement rejected proposals by a panel appointed by the government to help bring down the cost of living, while Finance Minister Yuval Steinitz praised the recommendations.

“Most of the proposed solutions are temporary or cosmetic changes and they maintain the destructive policies that brought us to this situation in the first place,” Dafni Leef, one of the founders of the group that set up tent-camps in Tel Aviv to protest high rents in July, said in an e-mailed statement.

The committee, headed by economist Manuel Trajtenberg, proposed yesterday that corporate taxes be raised to 25 percent next year and 26 percent in 2013, from 24 percent this year. Among its other recommendations were raising the top rate of income tax to 48 percent, increasing Israel’s stock of affordable housing, providing more childcare and nursery education, and opening markets to more imports.

Steinitz said the Trajtenberg committee “did well” in recommending improvements in education and social welfare “without breaking the budgetary framework and endangering economic fundamentals.” He was speaking in an interview broadcast on Israel Radio.

The tent camps that Leef and other leaders started in Tel Aviv’s fanciest neighborhoods spread to cities across the country and galvanized support for rallies in August that brought out as many as 400,000 people protesting the high cost of housing, education and food.

Defense Budget

The proposed tax increases would raise 30 billion shekels ($8 billion) over five years, and the money should mostly be spent on education, the panel said. It also proposed cuts to the defense budget.

Israeli consumer prices rose 0.5 percent in August, more than forecast, as rental costs climbed, government-regulated electricity fees increased and the weakening of the shekel helped push up import and travel prices. Annual inflation stayed at 3.4 percent, above the government’s target of 1 to 3 percent.

Bank of Israel Governor Stanley Fischer cut the benchmark interest rate by a quarter point to 3 percent yesterday, judging that the threat to Israel’s economy from a global slowdown outweighed the risk of higher inflation.

To contact the reporters on this story: Jonathan Ferziger in Jerusalem at jferziger@bloomberg.net; Calev Ben-David in Jerusalem at cbendavid@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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