New Economic Measures Made Public

The government, after nearly two weeks of debate on budget cuts, finally made public today a list of new economic measures to balance the national budget, but most of them are still subject to approval by either the Knesset Finance Committee or the full Knesset.

Two of the major decisions are to cut back on government financing of political parties and to reverse an earlier decision to designate the October 25 municipal elections a national vacation day. Officials said the two decisions should be worth three to four billion Shekels — equivalent to half the cuts this year in the Defense Ministry budget.

A number of other tentatively approved steps await Knesset action. One is abolition of allowances for births, unless the government can find another source of funds for this grant. Another is abolition of exemption from municipal taxes for Israelis in the armed forces.

Child allowances for the first two children in a family of up to three children will be taxable, except for low-income families. The fees for water will be updated at the same rate as those for electricity. Income earned abroad will be taxable at the same rate as local income. Income taxes on irregular earnings, such as writers’ fees and payments to artists, will be raised from 40 percent to 45 percent.

But the Cabinet rejected a proposal by the Ministerial Finance Committee, where the initial proposals for budget changes are hammered out, to impose the value added tax (VAT) on fruits and vegetables.

The Treasury still wrestled today with efforts to trim another 20 to 25 billion Shekels from the forthcoming budget. The main stumbling block continued to be the education budget. The Ministers of Finance and Education failed to reach agreement on the budget for education, and they will meet for another try tomorrow. Education Minister Zevulun Hammer said that if no agreement is reached with Finance Minister Yoram Aridor by the end of the week, the issue will be brought to the next Cabinet meeting Sunday.