Sapir Defends New Wage-price-tax Package from Critics Who Term It Unrealistic

Finance Minister Pinhas Sapir went on television last night to explain–and defend the defend the new wage-price-tax-package deal which has been criticized by some leading economists The arrangement was agreed to by labor, management and government and was approved by the Cabinet yesterday. Mr. Sapir conceded that it would not solve all of the country’s economic problems. But he said the alternative was a sharp tax increase and devaluation of the Israel pound in order to stem inflation and protect Israel’s dwindling foreign currency reserves.

In essence, the package deal promises restraint in wage demands, price rises and tax increases at a time when the Government is sorely pressed for revenues to meet mounting defense needs. But the average Israeli wage-earner was concerned mostly with how the deal will affect his take-home pay. Several Israeli newspapers did the arithmetic today and found that low salaried employes would gain slightly but those in the higher brackets would suffer a net loss. The newspapers based their conclusions on the present tax schedule without taking into consideration the “slight” increases in indirect levies promised by the Government.

Persons earning under $142 a month will gain about $10.50 in take-home pay but those earning $170 a month will only break even. In the higher brackets, a wage-earner drawing a monthly salary of $420 stands to lose $37 a month in take-home pay. According to the newspapers, this is because the cost of living increment–a maximum of $80 a month–will be offset by higher payments to the National Insurance Institute, an across-the-board five percent income tax rise and the national defense loan which has been made compulsory.