Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

20 Iyar 5762 - May 2, 2002 | Mordecai Plaut, director Published Weekly









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Home and Family
Cabinet Approves Economic Package
by Yated Ne'eman Staff

The Finance Ministry's economic program was approved by the cabinet, by a large majority of 17-9 late Monday. The votes against came from the five Shas ministers, three of Labor's ministers (Dalia Itzik, Matan Vilnai and Ra'anan Cohen) and David Levy (Gesher). Justice Minister Meir Sheetrit (Likud) abstained.

Finance Minister Silvan Shalom declared that the plan had been approved "without any substantial changes."

Three significant changes were, nevertheless, made to the plan before it was approved by the cabinet. First, the treasury has dropped the idea of imposing a wage freeze in 2002 and 2003 by legislation; instead, it will try to negotiate such a freeze with the Histadrut labor federation.

Second, the tax benefits afforded to development towns, the Negev and the settlements will be cut by about 50 percent.

Finally, the plan to cut some NIS 1 billion from child allowances by reducing payments to families that do not serve in the army will be amended, with the exact changes to be determined by a committee comprised of Shalom, Prime Minister Ariel Sharon, Defense Minister and Labor Party Chairman Benjamin Ben-Eliezer and Labor and Social Affairs Minister Shlomo Benizri (Shas).

Having passed the cabinet, has to be prepared for submission to the Knesset.

Shalom declared that the plan would generate economic stability and embodied both social justice and a clear preference for the middle class and army veterans. While it did include some painful elements, he said, these were necessitated by the economic and security situation.

Bank of Israel Governor David Klein sharply criticized one of the plan's key elements -- an increase in the budget deficit during the period 2002-2005 -- saying it would cause interest rates to rise and could damage Israel's international credit ratings. Klein also objected to several of the tax hikes in the plan, saying they would increase unemployment by making it more expensive to hire workers.

UTJ has threatened to leave the government if the cuts unfairly target the religious sector.


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