Leading economists are warning that Israel faces a deficit of nearly IL 4 billion for fiscal 1975-76 rather than the IL 1.5 billion deficit built into the new national budget now under study by the Knesset. A deficit of such proportions will lead to an unprecedented wave of inflation and the only possible solution is further cuts in the proposed IL 56 billion budget, especially the allocations for defense expenditures which, at IL 22 billion, comprises the largest single budget item, the economists say.
The experts, who all seem to be in agreement as to the real size of the deficit, include economists associated with the Bank of Israel, the Hebrew University and, in fact, the Treasury itself. They say that the gap between the official deficit contained in Finance Minister Yehoshua Rabinowitz’s proposed budget and actual deficit stems from the government’s retreat on tax matters and surrender to local pressures.
The reduction of the new payroll tax from 7.5 to 4 percent will result in the loss to the Treasury of IL 450 million, the economists say, The decision to compensate municipalities with special grants in lieu of local tax increases will cost another IL 220 million.
The additional budget for experimental educational projects in 18 new development towns and poor neighborhoods–undertaken in face of severe public criticism of the alleged neglect of the Oriental community–will consume another IL 120 million. Reduction of the newly imposed sales tax will deprive the government of IL 40 billion of income. In addition, the economists say, an expected IL 1 billion will not be realized because of the weak market for government bonds and delays in receiving other expected revenue will cost another IL 1 billion.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
