JERUSALEM (Sep. 23)
There will be no freeze of prices and wages in the immediate future but levies on personal income will go up substantially from now until the beginning of 1985.
A freeze package painstakingly worked out between the government, labor and management was postponed indefinitely. The government became convinced over the weekend that it was impossible to impose a price freeze at present. Instead, it will attempt to restrain runaway inflation by absorbing some $80 million from the public over the next four months.
With the agreement of Histadrut, the government announced Thursday night that it would impose a combined tax and compulsory loan on all incomes. The higher brackets will be hit by a 10 percent levy and lower incomes by eight percent.
An additional step will be to slash government expenditures. The Cabinet has already agreed in principle to reduce the fiscal budget by $1 billion. The problem now is where to cut. A number of ministers have taken exception to the size of the cuts for their ministries and the way it is proposed to divide the burden between the various ministries.
Finance Minister Yitzhak Modai is discussing these matters with individual ministers and promises to have a plan ready before the Rosh Hashanah holiday which starts Wednesday night.