The Cabinet approved yesterday a record budget of more than IL 36 billion for fiscal 1974-75 after nearly six hours of debate during which Finance Minister Pinhas Sapir promised there would be no new taxes. The proposed budget contains IL 14.5 billion for defense needs–less than the IL 16 billion in the current fiscal budget which was swollen by Yom Kippur War needs.
Sapir said the only tax this year would be an added value tax which was decided upon some time ago. The measure, which is controversial because such a tax is considered regressive, was necessitated in part by Israel’s desire to move closer economically to the European Common Market. Sapir said the burden would be offset by a decrease in direct taxation–probably abandonment of the seven percent compulsory loan which has been levied since 1971.
The Cabinet approved the proposed budget without dissent. But three ministers abstained: Deputy Premier and Education Minister Yigal Allon; Police Minister Shlomo Hillel; and Housing Minister Zeev Sharef. A political note was injected afterwards when supporters of Defense Minister Moshe Dayan criticized Allon’s recommendation that the defense budget be cut to free more money for education. Allon’s proposal was not put to a vote which reportedly was the reason why he abstained.
The defense budget for the next fiscal year was drafted by a small ministerial group that included Sapir and Dayan, presided over by Premier Golda Meir. Sapir said there was no time to submit the entire budget to the Knesset before the March 31 deadline and he would there fore present an interim three-month budget proportionate to the whole.
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