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Finance Ministry’s New Economic Plan Under Fire by Labor and Management

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The Foreign Ministry’s new economic plan was attacked by both labor and management Monday, probably delaying its formal submission to the Cabinet which was to have been this week. (See full story on the economic plan in the December 11 Bulletin.)

Histadrut Secretary General Yisrael Kessar, speaking for the labor federation, took strong issue with the plan to cut price subsidies, abolish most tax concessions and to tax welfare payments and pensions as well as salaried workers’ “study funds.”

The Manufacturers Association criticized Finance Minister Moshe Nissim’s plan on grounds that it does not sufficiently stimulate production and exports. The Association maintained that while taxes will come down and welfare services will be reduced, the introduction of health and education levies will make it impossible for employers to reduce their workers’ pre-tax wage packages.

The four-member Ministerial Economic Committee consisting of Nissim, Premier Yitzhak Shamir, Foreign Minister Shimon Peres and Minister of Economic Coordination Gad Yaacobi met with Histadrut leaders and industrialists Monday. They made little progress, although Shamir said afterwards there was agreement “in principle.”

Likud Deputy Premier and Housing Minister David Levy emerged as another leading critic of the plan. He said he would “not support” the new measures if they reduced the living standards of the lowest bracket wage-earners while increasing the income of the best-paid employes and the self-employed.

Nissim and his aides have offered amendments. They have failed so far to satisfy the critics. The Finance Minister’s problems were compounded by the release Monday of the official inflation figures for November. The cost-of-living index rose by 2.9 percent, considerably more than he had predicted.

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