David Horowitz, former Governor of the Bank of Israel, said last night that Israelis should be prepared to pay much higher taxes and that the nation’s economic policy-makers must take into account the recession in the United States and the new Isolationist mood in America.
Addressing the economic committee of the Labor Alignment here, Horowitz said Israel has been artificially shielded from the world-wide recession and the new tax burdens which every body complains about are, in fact, not high enough considering the nation’s extreme economic difficulties. Israelis, Horowitz said, were enjoying a living standard comparable to that of Europeans when harsh realities indicate that they should reduce their standards to the levels of 1972. He rejected Histadrut’s demand to preserve purchasing power.
Finance Minister Yehoshua Rabinowitz, addressing the same group, said he didn’t think the new payroll tax, which has been reduced from 7.5 to 4 percent, would cause unemployment. But he said he feared it might be used as a pretext for dismissals. The government’s policy is to abolish what he termed “over-employment,” Rabinowitz said. He added that the government was ready to cope with any pockets of unemployment that might develop.
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