Today\'s extended cabinet session covered the 2002 state budget and planned budget cuts. Labor Party ministers were reportedly ready to support Prime Minister Ariel Sharon and Finance Minister Silvan Shalom in their plan to cut NIS 6.15 billion from the budget. Finance Ministry officials agree that unless the budget is cut, the government deficit will balloon to 4.3 % of GDP, and a severe balance of payments crisis could develop. Ministry of Finance Accountant-General Nir Gilad said today that even international analysts believe that the government deficit could reach these unbearable dimensions unless revisions are made.
Labor ministers say they will wait until Wednesday to discuss how to make the necessary cuts. Earlier, Histadrut Labor Federation Chairman MK Amir Peretz (One Nation party) said that any cuts in the budget of the National Insurance Institute would make matters worse for the needy sectors in Israel, and that this is a red line which if crossed could lead to a crisis between the government and the Histadrut Labor Union. Israel Radio reported that the Shas Party said, even before the meeting, that it would vote against the budget.
The Finance Ministry has been talking about canceling the income tax breaks given to residents of communities in outlying areas. These tax breaks for some 500 towns cost about NIS 1.5 billion in the 2002 state budget. Also being considered is a new “rich tax” which would place a 10% levy on income for those who earn more than 30,000 shekels a month.
Labor ministers say they will wait until Wednesday to discuss how to make the necessary cuts. Earlier, Histadrut Labor Federation Chairman MK Amir Peretz (One Nation party) said that any cuts in the budget of the National Insurance Institute would make matters worse for the needy sectors in Israel, and that this is a red line which if crossed could lead to a crisis between the government and the Histadrut Labor Union. Israel Radio reported that the Shas Party said, even before the meeting, that it would vote against the budget.
The Finance Ministry has been talking about canceling the income tax breaks given to residents of communities in outlying areas. These tax breaks for some 500 towns cost about NIS 1.5 billion in the 2002 state budget. Also being considered is a new “rich tax” which would place a 10% levy on income for those who earn more than 30,000 shekels a month.