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Eshkol Considers Making Changes in Proposed Austerity Program

August 3, 1966
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Important changes were being considered today by Prime Minister Levi Eshkol and some of his economic aides in the three-year, economic austerity program outlined previously by Finance Minister Pinhas Sapir.

Some of the changes were being mulled in response to stern demands by the Mapam Party, which threatened to bolt the coalition government unless the “burdens and sacrifices” envisaged in the Sapir program were divided evenly among all sectors of Israel’s population, including big business and the self-employed. It was feared that, without the support of Mapam, the current coalition government might collapse.

Both Mr. Eshkol and Mr. Sapir, who have been meeting with the Mapam leadership since Sunday, have already agreed to impose certain restrictions on big business, to make sure that the living standards of the Israeli workers are not “over-deteriorated” by the new economic program.

Mapam has demanded specifically that the Government ensure in advance alternate employment for dismissed workers; enactment of an unemployment insurance law; absolute freezing of all prices, profits and dividends; and the levy of an excess profits tax on business incomes above certain limits. The left-wing party leaders want also the imposition of a one-time tax on capital, and the freezing at present levels of all subsidies for business and industry.

While these demands from the left were under consideration, Mapai Party senior officials were making their own plans for tightening the Sapir program. They have already decided, in separate meetings with Mr. Eshkol, to take strict measures against earners of high salaries, and on imposition of taxes on high-salary earners, corporations and businessmen.

With the new economic program facing criticism not only from Mapam but also inside Mapai itself, the Sapir plans are to be subjected to considerable revision before they are returned to the Cabinet for ultimate, final decisions.

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