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Cabinet Approves Budget Cuts As It Erupts in Intense Bickering

A divided Israeli Cabinet this week approved a $239 million cut in government spending aimed at covering planned tax reforms.

But the Cabinet’s decision was overshadowed by intense bickering among government ministers before the cut was approved.

The infighting led Prime Minister Yitzhak Rabin to warn that he would invoke his “full authority” against ministers who did not act in a civil fashion toward one another.

Rabin’s remarks came in the wake of a scathing memo he received from Police Minister Moshe Shahal, in which Shahal sharply criticized Finance Minister Avraham Shohat’s performance

Reports about the memo, which was leaked to the media over the weekend, were given prominent play in the Israeli press on Sunday.

In the memo, Shahal was qwoted as saying the country was “hurtling full speed toward an economic disaster.”

Sunday’s Cabinet session was designed to ease friction among the ministers who have been sparring publicly since the budget cut was proposed last week.

But the session became overheated, with Shohat calling Shahal a “liar,” and a “saboteur of the government,”

Shohat also accused Shahal of writing the memo to serve his own aspirations of becoming finance minister.

Shahal in turn denied the allegations, saying he had no interest in obtaining Shohat’s portfolio.

He also said he had “no regrets” about the memo, which he said included nothing he had not already stated openly in the Cabinet.

The Cabinet ultimately passed the spending-cut plan, with 10 ministers voting in favor and seven against.

The budget reduction will enable the government to reduce the employers health tax by nearly two percentage points. It also provides working women with an additional tax credit to offset higher health taxes.

The budget reforms, approved only two weeks after the Knesset passed its $49 billion annual budget for 1985, amount to less than one-half percent of the total budget.

Bank of Israel Governor Jacob Frenkel welcomed the Cabinet decision, but said it was not enough.

“I think the changes are in the right direction,” he told Israel Television. “I would like to see them in a larger magnitude about three times as much as what was adopted.

“I think our tax burden has gone up significantly in the past few years, and it’s essential to see its reversal,” Frenkel said.

The government, which has seen its popularity fall as inflation rates rose, could take little comfort from the latest inflation figures, which were released by the Central Bureau of Statistics on Sunday.

According to the bureau’s figures, inflation in 1994 stood at 14.5 percent nearly double the government’s projections for the year.

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