However, the planned changes in the 2007 budget, following these principles had no effect on the focal point of the policy: reducing the share of general government in the economy. The intention was to hold the increase in public expenditure to a rate slower than expected growth in business sector and household private consumption, estimated at more than 4 percent per year. Concurrently to this decrease, the share of government expenditure, the tax cuts that had been approved as part of the tax reform that began in 2003 were supposed to continue. The reform was intended to reduce tax revenue in 2010 by NIS 13 billion relative to the level that would have prevailed had its implementation been suspended in 2007.
This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).