The Treasury and Histadrut are locked in a dispute over whether the government’s austerity economic measures that take effect April 1 will or will not reduce the living standards of Israeli workers.
Arnon Gafni, director general of the Finance Ministry, insisted last night that Israeli families will not suffer a loss of disposable income when the new measures are implemented. Histadrut officials, on the other hand claimed that the living standards of 40 percent of Israel’s taxpayers will decline and predicted widespread unemployment as a result of the government’s economic program.
The Finance Ministry’s figures were arrived at by balancing the rise in municipal and other taxes and increased costs for basic food stuffs resulting from the reduction or elimination of government subsidies against increased cost-of-living allowances. According to Gafni, a family of four with a gross income of IL 2500 a month would gain IL 17 or 0.7 percent in disposable income after April.1. A family of six with the same monthly income would gain IL 47 and a family of eight, IL 81 per month.
Gafni explained that c.o.l. allowances payable in April would amount to 11.2 percent based on price hikes of 16 percent since last June. They will amount to IL 221 on a monthly income of IL 2000. In addition, he said, allowances for children payable by the National Insurance Institute which are based on the c.o.l. index would increase by 16 percent.
CONCERN ABOUT JOBLESSNESS PRICE HIKES
On the other hand, national insurance payments will increase from 3.3 to 4.5 percent; health institutions will have to increase their rates by 60 percent because of cuts in the Health Ministry’s budget; municipal taxes will go up by 60 percent and water taxes by 18 percent; the projected added value tax will add three percent to each family’s tax bill; and the reduction of subsidies will increase the prices of subsidized commodities by an average of about 30 percent. However, Gafni contended, even if there are no wage increases in 1976, real income after taxes will remain unchanged compared to 1975.
Histadrut officials pointed out that the Finance Ministry’s estimates are based only on measures to be taken up to and including April. They do not include future increases in the cost of electricity and tuition fees, Telephone rates will also increase in April and according to the Treasury’s own estimates, will add 1.2 percent to each family’s telephone bill.
The trade union leaders are especially concerned over large-scale unemployment. They estimated that 60,000 persons will be out of jobs in the coming fiscal year compared to about 35,000 unemployed at present. Histadrut is demanding new allocations to social services to maintain them at their present levels. Histadrut Secretary General Yeruham Meshel also warned of the political consequences of the government’s economic measures.
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