JERUSALEM: Israel's parliamentary finance committee approved the 2013-2014 state budget draft, paving the way for final approval in the full plenum next week.
To ensure passage, Finance Minister Yair Lapid agreed to cancel or limit the amount of tax hikes that were expected to especially harm the middle class his main constituency.
Parliament last month gave initial approval to a 17-month budget of tax hikes and spending cuts but vowed to make changes before final approval, which by law must be made by July 31.
Failure for parliament to approve the budget by the end of the month would trigger new elections.
The budget proposes a 2013 deficit of 45.6 billion shekels or $12.8 billion, or 4.65 percent of GDP, and 31.1 billion, or 3 percent of GDP, in 2014.
Budget spending will total 395 billion shekels in 2013 and 405 billion in 2014.
Lawmakers and the public were angered by a series of austerity measures aimed at dealing with the budget deficit, including a proposed and unpopular 1.5 percentage point across-the-board rise in income tax, a planned home buyers tax and taxation on housewives.
Lapid agreed to cancel the taxation on home buyers and housewives while taxing higher salaries more than lower ones.
To ensure fiscal targets are met, spending cuts to ministries have been deepened.
Indecision over how to tackle a nearly 40 billion shekel deficit in 2012 brought down the previous government.
That triggered an election in January and catapulted Lapid into government, a centrist who campaigned on promises to reduce the middle class's economic burden. (Reuters)
