Finance Minister and Histadrut Appear to Be on Collision Course

Finance Minister Yigal Cohen-Orgad and the Histadrut, Israel’s powerful labor federation, appeared today to be on a collision course after the Finance Minister rejected a Histadrut request to consider amending present income tax brackets for more protection for workers against inflation and increasing children’s allowances.

Yisrael Kess##, Histadrut secretary-general, told a meeting of the Histadrut central committee today that he was demanding a special meeting of the Knesset to discuss Cohen-Orgad’s refusal.

Kessar argued that retaining present tax brackets would mean that the 9.9 percent cost-of-living increase, due to be paid with August salaries on September 1, following the 12.5 percent July price index rise, would be almost completely eroded before the workers received it.

FOREIGN CURRENCY RESERVES DROP

Cohen-Orgad appeared to be in an angry mood this weekend when questioned on a television interview program about disclosures that a $351 million drop in July in Israel’s foreign currency reserves, leaving those reserves at what economists called a critical level, had been made to appear, by a bookkeeping maneuver, as half the actual drop.

The difference, disclosed by Israel Radio’s examination of Bank of Israel monthly returns, was caused by temporary transfer of foreign currency funds owed by foreign residents to the government, a transfer which Cohen-Orgad had explained was merely making use of a less expensive source of foreign currency than applying to banks overseas.

Histadrut spokesmen said this “maneuver,” coupled with Cohen-Orgad’s refusal to amend the tax brackets, had cost the Finance Minister whatever credibility he had enjoyed with the public.

Cohen-Orgad said today that, if the tax brackets were adjusted, there would be a consequent decline in income tax receipts and he would have to print more money, adding still more to Israel’s rampaging inflation.

He repeated his charges that Israel’s economic situation was not improving because of Histradrut’s refusal to discuss with him a wage package or a social contract agreement, the latter presumably linking costs, wages and prices in some form.

The Histadrut reiterated its reponse that a proposal for such wide-reaching basic economic changes could not be negotiated with a temporary caretaker government, but must await the outcome of talks for a new government.

MEDIA COMES UNDER ATTACK

The Finance Minister has angered not only the Histadrut, but also the press, particularly radio and TV, by a sharp attack on the media in his TV appearance in which he accused radio and TV of causing despair by questioning him about the “approaching bankruptcy” of Israel. He said TV reporting on the country’s financial situation had caused panic in July and contributed to the large drop in foreign currency reserves.

Radio and TV journalists responded with a demand for an apology from Cohen-Orgad, threatening to boycott him if he refused.

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