Austerity Program to Affect Lives of Majority of Israelis

Details of a proposed austerity program which is expected to radically affect the lives of the overwhelming majority of Israelis, were disclosed here today. The broad-ranging program, which is still under discussion among the Mapai-Achdut Avodah economic ministers themselves and between them and leaders of the leftwing Mapam Coalition members, reflects a number of changes sought by Mapam to “more evenly distribute the burdens and sacrifices” among the Israeli population.

Among the projected measures, which are aimed at cutting production costs and thereby increasing exports, is an 18-month freeze on wages, taxes, distributed profits, subsidies and prices. Other provisions of the program, which was discussed last night by the Ministerial Economic Planning Committee, include:

1. The freezing of the cost-of-living allowance until the end of next year and the cancelation of a five percent wage rise approved by the Ristadrut, Israel’s labor federation, for 1967;

2. The imposition of a 55 percent tax on any increase over last year’s dividends paid by companies to shareholders;

3. The reduction of foreign currency allowances for Israeli travelers abroad from the current $500 per trip to $400 for the first trip and $200 for each additional trip.

Although the proposed austerity measures are still to be discussed among the Coalition factions, Mapai, Achdut Avodah and Mapam leaders in the Histadrut today informally expressed their opposition to that part of the plan which would cancel the five percent in- crease next January. The Histadrut leaders informed their respective party secretariats that they will oppose such a decision since it was their task to protect the interests of the Israeli worker.

Even more formidable opposition to the plan was indicated by the National Religious Party, another Coalition partner. NRP leaders have asked for an urgent meeting with Premier Eshkol to discuss the program and to express their dissatisfaction at being kept out until now of the negotiations between the Alignment’s economic ministers and Mapam. Finance Ministry circles, meanwhile, said that foreign currency allocations will not be curtailed before the summer vacations are over.

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