Prices Increase, Belts Tighten

Israelis woke up this morning to be told they will pay higher prices for many products. The Ministerial Economic Committee decided last night to increase taxes on a long list of products and to cut down subsidies for others as an additional source of income to cover war expenses. The government’s move will cause an average price increase of three percent. The government will gain IL 1 billion out of the new price regulations.

Altogether the government will have absorbed IL 4 billion for the next year; one billion will be absorbed by the compulsary loan at the rate of 7 percent of the income; another billion from the voluntary loan which now includes almost every large organization; IL 750 million will be gained from a gasoline price increase which reached about 40 percent; and another IL 160 million from hiking electricity rates about 30 percent.

The Israeli housewife will soon feel the additional pinch in her budget. But, as one economic analyst wrote today, “Israel has sacrificed many people and resources in this war. It’s about time she sacrificed the high standard of living.” The new regulations went into effect at midnight. On most of the imported goods one will have to pay an additional 5 percent above the 20 percent of the import levy.

The sales tax on consumer goods went up 5-6 percent. The tax was also increased on cement, furniture, shoes, cigarettes, and glassware. Subsidies for rice and frozen meat were cancelled. The new regulations will ease the pressure on the country’s budget and serve as a tool in the fight against inflation that Israel was waging long before the war broke out.

Deputy Secretary of State Kenneth Rush told a Senate appropriations subcommittee today that approval of a Nixon Administration proposal to provide Israel with $2.2 billion in military equipment would improve prospects for a Mideast peace agreement.