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‘alignment’ Accepts Eshkol Economic Plan but Other Parties Balk

September 6, 1966
See Original Daily Bulletin From This Date

The dominant alignment partners in Premier Levi Eshkol’s government — Mapai and Achdut Avodah — have endorsed separately the same version of Finance Minister Pinhas Sapir’s three-year austerity program to deal with Israel’s economic difficulties. However, the remaining hurdles to full coalition agreement on the plan are still formidable, A principal need is to obtain approval from Mapam, which informed the Premier that it had not budged from its insistence on a compulsory loan as a condition for its approval. Mr, Sapir is strongly opposed to such a loan.

Another obstacle to the Eshkol effort to win coalition agreement for an austerity program is the adamant refusal of two other coalition partners — the National Religious Party and the Independent Liberals –to accept the Mapam demands. The two parties are sched- uled to formulate their views on the various elements of the Sapir plan this week, but they have indicated they oppose higher taxes and favor more industrial efficiency and reductions in government spending as the best way to help Israel’s problems.

The proposal approved by the Mapai secretariat and by the Achdut central committee would expand imports by keeping wages down, by revising work norms upward and would seek more efficient use of labor through worker transfers if necessary. The parties also approved proposals for increased taxes on capital gains, and reductions in expense allowances to businessmen.


In addition, the two parties moved to find jobs for 25,000 workers currently unemployed, a figure which they feared might reach 50,000 by next year. They accepted a proposal by Akiva Govrin, chairman of the Alignment’s economic committee, to set up a special “Unemployment Authority” to seek work for the jobless. Dismissals of workers have continued in a number of plants and factories throughout the country, following decreases in production schedules. Efforts are now being intensified to prevent further dismissals on the eve of the High Holy Days, while a new wave of unemployment is feared by the end of this month.

The Mapai-Achdut agreement also provides for continuation by the Government of its education, housing and social welfare program, and for assisting development areas hardest hit by Israel’s swelling unemployment; calls for a balanced budget, aimed at economic advancement and for assuring “social justice”; and urges more efficient investigation of income tax obligations so that “all sectors of the population” will pay their required taxes.

The plan calls on labor to be more “conscious of its responsibilities” and “more fluid” in passing from one sector of the economy to another “as circumstances demand.” The plan calls on the Government to assure stable prices, which would include supervision of monopolies and cartels. Under the plan, the capital gains tax would be increased from 25 to 30 percent, while commissions of banks and insurance companies would be reduced by 10 percent.

Foreign currency allowances for visits abroad would be cut from $500 to $350. The plan would give main emphasis to incentives to increase exports by tax reductions and by government subsidies to exporters.

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