The Treasury submitted a $32 billion state budget for fiscal 1990 to the Knesset on Monday that underestimates by more than half the number of immigrants from the Soviet Union expected in Israel this year.
The $900 million earmarked for immigration provides for 40,000 newcomers. By the time the budget was completed, estimates had been revised upward to 100,000.
Finance Minister Shimon Peres said the budget shortfall in absorption costs would have to be made up through overseas loans and the sale of state-owned corporations and commercial bank shares.
Treasury experts said large-scale aliyah has its good and bad sides, as far as the economy is concerned. It is expected to contribute to the surging inflationary trends and mounting unem- ployment. And absorption costs are likely to increase the foreign debt.
On the positive side, however, the influx of immigrants will boost consumption and nudge the economy back to renewed growth, one of Peres’ major goals.
In fact, the finance minister described the budget Monday as “a bridge from the period of economic slowdown to one of economic growth.”
CHANGES IN TAXES AND SUBSIDIES
But it spells some new hardships for Israelis, established citizens and immigrants alike. The value-added tax will go up, as will the costs of subsidized goods and services, including fuel, water, milk, cigarettes and public transportation.
Parents will have to pay for an extended school day, whereas elementary education until now has been virtually free. Child-support allowances will be reduced, as well.
The Treasury will abolish tax exemptions for students, working women, residents of development towns and workers employed on late-night shifts.
The marginal income-tax rate, now 51 percent, will be reduced. The sales tax will be cut and the Defense Ministry will reduce the number of days of active duty required of reservists.
Peres told the Knesset that the fate of the economy in the next decade would be determined by peace or its absence, the intifada, security needs and the scope of aliyah.
He said the four main goals of the new budget are creating conditions for economic growth, minimizing the government’s role in the economy, correcting the imbalance in the distribution of income and absorbing immigrants.
In the past year, the gross national product rose at a per capita rate of 2.5 percent. Industrial production increased by 5.5 percent. The foreign debt went down and tourism picked up.
But the annual inflation rate exceeded 20 percent, foreign investments continued to lag behind needs and unemployment soared to 9 percent.
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.
