A compulsory loan and indirect taxes are the Israel Government’s latest proposals to make up a deficit in the budget created by a freeze of American aid, it was learned here today. The loan is expected to amount to seven percent of wages or income.
The loan is the government’s reply to labor opposition to a proposal by Finance Minister Levi Eshkol to freeze the cost of living allowances added to wages at their present levels while permitting prices to rise by a withdrawal of government subsidies for essential commodities.
Earlier, the Finance Minister insisted that only a freeze on cost of living allowances would prevent an inflation, but now the government hopes that a compulsory loan and indirect taxation will go far in holding down an inflationary spiral.
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