Finance Minister Yigal Hurwitz met yesterday with Premier Menachem Begin for the second consecutive day in an effort to gain his support for a meogre new budget for 1981-2.
Following the meeting, Hurwitz promised that he would not impose new economic burdens on the public, and that the “prosperity” would continue. Hurwitz met Tuesday with Begin for on hour, and briefed him on the main points of his economic plan. Begin reportedly only listened.
Hurwitz did not appear encouraged upon leaving the initial meeting. He would not disclose the details of the new plan, but a number of principles were disclosed: the government will not increase tax rates and national insurance dues may even be lowered. However, at the same time the government will cancel many services, including non-mandatory education, aid to sick-funds, support of universities, backing of residential construction and reducing army payrolls.
It was also indicated that the ranks of the Israel Defense Force will be reduced and funds to local authorities will be conditional on budget and staff cuts. The municipalities will be allowed to impose a municipal Value Added Tax (VAT) of 1.5 percent; the diplomatic staff overseas will be reduced, as well as other official representatives overseas; a near-freeze will be imposed on inter-urban highways, and the State will continue to sell properties such as government corporations.
Altogether, the budget will aim at stabilizing the rate of inflation around an annual 100 percent. Presently, the annual rate of inflation is 138 percent.
This year, for the first time, Hurwitz intends to introduce a strict budget which will not allow for any deviation. The various ministries will have to learn to live with their shares in this general framework. This means, of course, that the ministers would have to reach on agreement in the Cabinet.
In the past, the Cabinet has been on arena for dog-fights between the ministers on this issue. It was the argument over the defense budget which led to the resignation of Ezer Weizman as Defense Minister. It was for this reason that Hurwitz was trying to reach an understanding with Begin–both in his capacity as Premier and Defense Minister.
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