The price of fuel oil rose in Israel today in the wake of the announcement last. Friday that the government was discontinuing the payment of subsidies to keep down the price of oil.
The gas companies have already upped their prices while transport companies have announced that they are this week preparing new and increased fare schedules to make up the difference in their fuel costs. The Palestine Electric Corporation, another important user of fuel oil, also intends to increase its prices for power, which in turn will raise the costs of water and agricultural products which depend on irrigation.
Minister of Finance Levi Eshkol estimated that elimination of this subsidy would save the Treasury the equivalent of $15,000,000 and increase the cost of living index by 20-22 points. He believes that the elimination of all government subsidies aimed at keeping down the price of major commodities will save the government about $70,000,000. This, he feels, is a greater saving than will have to be paid out to make up for the cost of living index raises.
The fight over abolition of the subsidies is an old one within the coalition Cabinet. The General Zionists have opposed it while the Mapai has favored it. About two weeks ago the Cabinet handed over the problem to the special committee of economic Ministers which, in turn, gave it to a subcommittee to decide. The subcommittee decided to abolish subsidies gradually, despite the objections of the centrist party.
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