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Peres Budget Proposals Pass After Marathon Cabinet Debate

December 27, 1989
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The essentials of Finance Minister Shimon Peres’ budget proposals for the new fiscal year were approved by a substantial Cabinet majority late Monday night, despite a fierce rear-guard action fought against them by a hard core of Likud ministers.

At the end of the second day of debate, the ministers voted 19-4, with two abstentions, in favor of the budget framework.

Persistent and at times vociferous opposition was mounted during the marathon session by Ariel Sharon, David Levy and Yitzhak Moda’i.

They were joined on some issues by Foreign Minister Moshe Arens.

Peres’ fellow Laborite, Defense Minister Yitzhak Rabin, was also said to be unhappy with his share of the budget pie, despite Peres’ last-minute efforts to find an additional $75 million for the Defense Ministry.

Another source of opposition was the director of the National Insurance Institute, Mordechai Tsippori, who warned that proposed cuts in the child allowances and relatively small increases in old-age pensions would drag whole new sections of society below the poverty line.

Peres has accepted the Bank of Israel’s advice to keep the deficit down to $1.5 billion, to ensure that inflation does not exceed its present rate of 20 percent a year.

Peres has stressed in his speeches the need to fund the wave of emigration from the Soviet Union, while defense spending needs to be kept up to combat the intifada.

His budget proposals include an overhaul of the income tax system, which will raise taxes from 15 to 16 percent next summer, and a value-added tax to be implemented soon.

There also will be hikes in the prices of tobacco and gasoline.

Another of Peres’ proposals is to lengthen the school day from noon to mid-afternoon. The extra cost would be picked up by the more affluent parents. Currently, public education is free.

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