JERUSALEM, Jan. 29 (Xinhua) -- Israeli Prime Minister Benjamin Netanyahu has set up a panel of treasury officials to draft an austerity plan to contain the country's yawning deficit, local Globes daily reported on Tuesday.
According to the report, the team will focused on two objectives, slashing the government spending for 2013-2014, which may entail slimming down the government, and improving the income balance, which may include raising the taxes.
Although Netanyahu assured prior to the Jan.-22 elections that there would be no tax hikes or budget cuts, austerity measures seem hard to walk around in light of the current high deficit, standing at 4.2 percent of Israel's 10.5 billion U.S. dollars GDP.
Security matters, including building a fence on border with Egypt to stem illegal immigrants, were the main reason behind 2012 's excessive spending, which was 0.57 billion U.S. dollars higher than in 2011.
Globes' report suggested reducing salaries and benefits for employees of the public sector to achieve a budget cut of 4 billion U.S. dollars, or canceling the tax exemption, amounting to 600 million U.S. dollars, on advanced study funds granted to them. It also said the panel may recommend tax hikes, which Netanyahu's government has been trying to avoid.
However, these measures may set off a war between the treasury and the Histadrut, or General Federation of Labor in Israel, which may call for a strike capable of shutting down the country.
After the general elections, the incoming cabinet, which will likely be headed again by Netanyahu, will have 45 days to draft its budget proposal for 2013 after it is formed.
In October, Netanyahu announced to hold the early elections after his 2013 budget proposal failed to get a majority approval within his own coalition.
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