Appeal to Halt Stock Market Panic

Finance Minister Yigal Hurwitz appealed to the public today in an attempt to halt the stock market panic that greeted his new measures aimed at cracking down on tax evaders. He urged Israelis not to be “fooled by speculators” who are dragging the market down.

Prices dropped by 10-30 percent on the Tel Aviv Stock Exchange yesterday and 67 stocks were not traded at all. It was the steepest plunge since the government declared war on “black money” last Friday — money that passes through the economy without being taxed. Hurwitz sought to assure investors that he has no intention of using the stock market as a tool against tax dodgers. He said the status of the market would be unchanged and the trend toward liberalization would continue.

He recalled that when he took office as Finance Minister last November, market prices dropped by 20 percent. “I called on the public then not to be fooled by speculators and the public believe me and the scare disappeared. I again call on the public not to become victims of speculators. I only want to avoid block money transactions, both in local and foreign currency,” he said.

Nevertheless, Israelis were clearly shaken by the government’s abrupt economic moves and uncertainty is rife among individuals and in the business community. The stiff measures to enforce tax laws were announced simultaneously with the switch from the Pound to the new Shekel as legal tender, at a rate of 10-1. While Hurwitz was trying to calm fears, the Treasury initiated an amendment to the present tax law which will require hundreds of thousands of citizens to submit a detailed statement of their personal assets by a May deadline.

The statements will have to list the contents of private safe deposit boxes, a controversial measure. Hurwitz had demanded in addition that safe deposit boxes be opened in the presence of an income tax official. But a Cabinet majority rejected that requirement as an unwarranted invasion of privacy. The statement will be required from every person who earned over IL 660,000 or 66,000 Shekels (approximately $10,000) last year.

Meanwhile, economic analysts are criticizing Hurwitz for frightening the public with measures that have little real economic value. Prof. Assaf Rasinne, a former advisor to the finance, Ministry, said yesterday that the government would have done better to concentrate on drafting a constructive budget. Some commentators said Hurwitz is losing the popularity he has enjoyed so far.