Economic Program Contains Most Radical Austerity Measures Since ’50s

Economic Incentives for New Settlers May Be Eliminated

Many economic incentives for new settlers that Israel has offered to attract Immigrants, especially from Western countries, will be eliminated or curtailed if drastic economies recently submitted to the Ministerial Committee on Economic Affairs are adopted. The program which was worked out by the Treasury and disclosed in part today, contains some of the most radical austerity measures since the early 1950s. Its purpose is to enable the Treasury to meet soaring defense needs while keeping pace with the needs of an expanding population, particularly in the areas of health, education and housing.

Mortgages at a low 8-9 percent interest presently granted all immigrants will in the future apply only to those settling in what are designated “A” development areas such as Eilat, the town most distant from the center of the country and Beisan on the hazardous border with Jordan. Settlers in “B” development areas which include Jerusalem, will have to pay 10 percent on their mortgages and those in central parts of the country, 12 percent.

FREEZE ON DIVIDENDS

Tax exemptions for newcomers will be reexamined in light of complaints from some sections of the public that they are too lavish. A maximum tax rebate on cars and other durable goods will be fixed. An immigrant may have to make a choice between a new car or a refrigerator. A Jewish Agency spokesman said today that he was sure the Agency would be consulted before any of the new measures becomes law. There was no reaction to the substance of the proposals from the Jewish Agency inasmuch as they are still to be studied by members of the Executive.

The Treasury has also proposed a freeze on dividends at last year’s level; continuation of price controls through 1972; a ban on replacing government vehicles, including ministers’ cars, except for major mechanical reasons; no new furniture for government offices; and no meals for officials at government expense, Economic observers said the proposed measures would probably not save large sums of money but were intended rather to create an atmosphere reflecting the nation’s economic condition and to avoid displays of luxury.