An “anti-inflationary” budget for 1954-55, totalling 571,000,000 pounds–approximately $317,000,000–was presented last night to the Israel Parliament for approval by the Cabinet. In presenting the budget, Finance Minister Levi Eshkol emphasized that the budget is aimed at checking inflation and at speeding up and stabilizing the country’s economy.
The Minister, who estimated that prices would rise about 10 percent in the coming year–as compared to 20 percent for the past year and 66 percent the year before that–called on the Israeli people for an all-out effort and for continued austerity in national life to match the increased efforts of Jews abroad in behalf of Israel’s financial stability.
Mr. Eshkol reviewed the economic highlights of 1953, stressing that the balance of payments had improved. Exports had risen from $43,000,000 of a year ago to $60,000,000 this year, while imports were cut from $310,000,000 to $286,000,000.
Israel’s foreign currency situation has improved considerably, he pointed out, particularly due to the success of the “consolidation loan”–the five-year loan by American Jewish communities, underwritten by the receipts of the United Jewish Appeal, which is designed to provide for Israel ready cash to retire many short-term obligations and thus save heavy interest charges.
The Finance Minister expressed particular thanks to Edward M. M. Warburg, general chairman, and Dr. Joseph J. Schwartz, executive vice-chairman, respectively, of the United Jewish Appeal, who have sparked the drive for the $75,000,000 loan, most of which has already been raised.
NATIONAL INCOME ROSE DURING YEAR, ESHKOL REPORTS
Real national income had risen 13 percent by the end of December, 1953, as compared to December, 1952, he reported. Agriculture and industry expanded last year and $197,000,000 came in from external sources–sales of Independence Bonds, German reparations, American grants-in-aid and other sources. A central national bank will be established soon, he added.
Filling in the picture as it pertains to agriculture, the Finance Minister disclosed that 43 new settlements were established last year, that the cultivated area of Israel had reached the 1,000,000 dunam (250,000 acre) figure–an increase of 20 percent–and that the total area under irrigation was now 640,000 dunams–an increase of 30 percent.
Israel is already growing cotton and its export peanut crop will total $1,000,000 in the next year, he said. Fifteen thousand additional dunams were planted in orange trees last year and 20,000 dunams are planned for this year. The major emphasis in agriculture this coming year, he underlined, will be in consolidating present gains and in expanding irrigation facilities and increasing overall water resources.
A total of 96 new industrial enterprises were started last year with a total invested capital of $14,000,000 and 9,500,000 pounds. Industrial exports doubled last year as compared to 1952, the production of electric power also doubled and the production of various mineral resources was begun, while the extraction of potash was resumed. Investment continues on a high level, he emphasized.
The new budget–including 261,000,000 pounds for ordinary expenditures and 168,000,000 pounds for development purposes plus various sums for debt retirement, food subsidy programs and other purposes–is based on an overall rate of 1.8 pounds to the dollar. This factor alone made for a substantial increase in the size of the budget, an increase considered more realistic in terms of financial planning and thinking. Among the necessary expenditures which provide a heavy drain on the Treasury, Mr. Eshkol said, is the cost of educating some 200,000 children at an estimated cost of 30,000,000 pounds this year. He also reported on measures taken by the government to cut some of its fixed administrative costs.
INCOME TAX IN ISRAEL NOT HIGHER THAN IN OTHER COUNTRIES
Turning to taxes, the Minister asserted that the tax burden was not oppressive and that compared to income taxes in other countries, the Israeli income tax was not high. He announced that the government was taking extraordinary measures for collecting its taxes more efficiently and for punishing evaders. It is the government’s policy to place the emphasis of taxation on indirect taxes and to reduce taxes on necessities while increasing them on luxury items.
The unemployment problem is still grave and may be further aggravated by the national drive for increasing the productivity of labor and industry, Mr. Eshkol stressed. There is no solution except for the jobless to turn to agriculture which is able to absorb upwards of 10,000 workers immediately, he insisted.
Mr. Eshkol concluded his presentation with the statement that “we have before us an enormous historical task. Its fulfillment is possible only if the people of Israel become a colonizing and building people, and if each does his part in establishing Israel’s independence.”
President Isaac Ben Zvi and all members of the Cabinet were present for the Parliamentary debate which began last night immediately after the presentation of the budget.
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