Israelis to Pay More for Electricity; Government Subsidy Discontinued

The Ministerial Economic Committee decided today to raise electricity charges by six percent. The reason given for the steep increase was that the Treasury was no longer able to pay a million pound subsidy to the company.

The decision provided fresh evidence of the Government’s economic problems. The increased charges will add to the inflation which has led to a proposed three-year austerity program prepared by Finance Minister Pinhas Sapir. The coalition partners in Premier Levi Eshkol’s government have been battling over the plan since it was first proposed several months ago.

The coalition partners met yesterday for a general discussion of the much-amended Sapir plan, with Premier Eshkol presiding. Informal reports on the session indicated that Mapam was still insisting on a compulsory loan and heavier income taxes for higher income groups. Mr. Sapir is strongly opposed to a compulsory loan. The National Religious Party and the Independent Liberals oppose both the loan and the steeply higher income taxes.

Moshe Shapira, Interior Minister and NRP leader, said before the meeting that his party generally supported the Sapir plan but that, after many compromises, about all that was left of it was a proposed cut in cost-of-living allowances to Israeli wage-earners.

Meanwhile, it was reported today in Maariv, an evening paper, that Minister of Trade and Industry Haim Zadok had resigned from Israel’s Cabinet in protest against the “final form” of the new economic policy being drafted by Prime Minister Eshkol. The resignation, said the newspaper, was handed to Mr. Eshkol several days ago.

Questioned about the report, Mr. Zadok refused to comment. Maariv added that Mr. Eshkol had prevailed upon Mr. Zadok to postpone a final decision on his threat to resign, until a compromise formula is worked out in the plans for the new economic program. Israel’s full Cabinet is to debate the economic issue again at its next meeting on Sunday.

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