General Zionists Oppose Ending Israel Subsidies to Industry

A motion to reconsider the decision to end the payment of subsidies to manufacturers and other primary producers in an attempt to keep commodity prices down was debated here today at a meeting of representatives of the parties involved in the government coalition.

The motion was introduced by the General Zionists, who have opposed the removal of subsidies throughout the long inter-party and intra-Cabinet debates. The decision to gradually abolish the subsidies, beginning with the subsidy for fuel Oil, was announced by Finance Minister Levi Eshkol last week after a special subcommittee of economic Ministers–to whom the problem had been referred–decided on this procedure.

The General Zionists, introducing their motion, argued that they were not informed in advance of the actual steps taken” by Mr. Eshkol, although they admitted that they knew his views on the matter and his intentions. Since the Cabinet as such had not voted to abolish the subsidies, the General Zionists insisted, Mr. Eshkol’s action was unilateral.

Mr. Eshkol has estimated that wiping out the oil subsidy will save the government the equivalent of $15, 000, 000 annually and that when all subsidies are ended the Treasury will be ahead to the extent of $70, 000,000 a year. While he admitted that the cost of living index would rise as a result, he believed that the extra costs involved in such a rise would be less than the savings from the subsidies.

Testifying today before the Parliamentary Finance Committee, Mr. Eshkol said that unless the Treasury is allowed to balance the budget by wiping out the subsidies, the Finance Ministry will request the government to order a new “compulsory loan. ” Mr. Eshkol, striking back at the General Zionist demand for revocation of the decision to scrap the subsidy program, demanded the Knesset committee approve his economic policy of ridding the budget of the burden of subsidies and passing on the problem to the individual citizen.