JERUSALEM (Sep. 12)
The Ministerial Economic Committee decided yesterday to take a series of measures to halt the spiraling rate of inflation, including cooling the economy and freezing all wage agreements.
Following five separate meetings on the subject in recent weeks, the committee decided to reduce investments in the economy by some 1L 4 billion, a step considered essential if economic activity is to be slowed down. The cool off is expected to hurt the country’s industry only minimally. “If the step is really implemented in order to reduce the government’s deficit, then there is a chance we can reduce the rate of inflation,” said Bank of Israel Governor Arnon Gafny. “While I can’t say I’m totally happy with the decision taken, we will have to wait and judge it by its implementation.”
The committee also decided to freeze all wage agreements until April, 1980. “We now see 1978-80 as the end of a period,” said Finance Minister Simcha Ehrlich. “There will be no more demands and no new agreements.” Wage agreements currently under negotiation are to be finalized by the end of September.
WILL LIFT VAT ON APARTMENTS
A third decision taken by the committee that will affect the public to the greatest degree concerns housing. Persons entitled to an apartment according to the point system used by the Housing Ministry, such as young couples and soldiers, will no longer have to pay the value added -tax (VAT) on their new apartments. It is estimated that this step will cost the government some 1L 1 billion and will reduce the price of a given apartment by some 20 percent.
“This is a social question of the first order,” Ehrlich said. “Housing is one of this nation’s most foremost problems.” Housing Minister David Levy agreed.