Treasury divided on implementation of emergency economic plan

Finance Ministry Director General opposes new taxes
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Heads of divisions and senior officials at the treasury widely differ on the implementation of the NIS 10 billion emergency economic plan ordered by Prime Minister Ariel Sharon. Several officials oppose the proposal to impose new taxes and a compulsory war loan.

Despite the difference of opinion, it seems the treasury will impose a war loan, and drastically raise taxes on alcoholic beverages and cigarettes for a prescribed period of time. The treasury is also considering imposing a tax on public transport, and increasing VAT. In fact, the heads of the treasury are today discussing all options to implement the emergency plan. "It's all on the table," a senior official said.

Finance Ministry Director General Ohad Marani, who is heading the plan, opposes new taxes. However, given the huge scope of the proposed plan, it will be difficult to avoid imposing new taxes.

The ministry is planning a NIS 5 billion budget cut including abolishing private legislation, including the Negev law and the large families law which afford tax breaks to residents of the relatively undeveloped south and families with more than four children. The treasury is also planning cuts to all ministries' budgets. Meanwhile, the prime minister has also ordered a NIS 2 billion increase in the defense budget.

The emergency economic plan is undoubtedly a tough one. The ministry is planning to implement it quickly, as long as the fighting continues, as this is expected to make it easier for the government to get the plan to be approved. It is assumed that ministers will find it hard to oppose the plan as the fighting continues.

Israeli forces have been mounting counter-terror operations in the West Bank for the last two weeks.

One senior economist said that Finance Minister Silvan Shalom has a golden opportunity to correct all his errors. He can make a significant cut, and transfer monies to places that would promote economic growth at the end of the present crisis. He noted that globally there is already economic recovery, and it would be a pity if Israel misses the wagon.