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Home
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UTJ Opposes Cuts; Interest Rate Raised
by Eliezer Rauchberger and M. Plaut
UTJ and Shas have announced that they will oppose the new
cuts in the state's budget for 2002-3, currently being
proposed by the government. The main reason for this
opposition is the government's intention to once again harm
the country's weak sectors and the large families, a course
of action which includes a serious cut in the Children
Allotments of Bituach Leumi.
Prime Minister Ariel Sharon approved the Finance Ministry's
emergency economic plan on Tuesday (11 Iyar), which calls for
a 13 billion shekel cut in the State Budget, mainly due to
the increase in security expanses and the decrease in the
state's income because of lower than projected tax
collections.
The Finance Ministry presented the plan to the Prime Minister
at the beginning of the week. This plan includes raising
cigarette and gasoline taxes, raising the VAT by one percent
(from 17 to 18 percent), raising the ceiling for National
Security payments and health tax, an across-the- board four
percent cut in the budgets of all government offices,
freezing wages, cuts in the salaries of Knesset members,
Knesset ministers, general directors, mayors and their
deputies, senior officials in government offices and public
service officials. It also calls for privatizing government
companies and many other types of cuts.
On Monday, Bank of Israel Governor David Klein announced that
the internal interest rate would rise this month by 0.2
percent. Though still low by historical standards, the
interest rate has risen by 0.8 percent in recent months. The
rate rise came as the inflation rate has become relatively
high in recent months, and there is concern that it may go up
further as a result of the currency devaluation and political
uncertainty.
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