The Bottom Line / Emergency dos and don'ts
At first, the Finance Ministry mentioned an NIS 8 billion budget cut, and now it is talking about one of NIS 13 billion. Let's say there is a NIS 10 billion shortfall, and until the plan is put into action, half the year will have passed.
At first, the Finance Ministry mentioned an NIS 8 billion budget cut, and now it is talking about one of NIS 13 billion. Let's say there is a NIS 10 billion shortfall, and until the plan is put into action, half the year will have passed. Therefore, in order to cut NIS 10 billion, Finance Minister Silvan Shalom will have to slash annual expenditures by NIS 20 billion - a vast sum. But even in an emergency situation, there are right and wrong ways of going about things. So here are some suggestions, in order of dreadfulness.
1. Canceling the increase in child allowance for the fifth child upward is the most correct proposal, since it is both economically and socially correct. Cancelation would discourage poor families from having more children.
2. The second law that should be annulled is the Negev Law, which grants unjustified tax benefits to all Negev residents. At the same time, the ministry should cancel the tax breaks for residents of the settlements and the North. All told, this would lead to an enormous saving of NIS 1.6 billion.
3. Deferment of reductions in betterment tax, sales tax and other benefits recently granted by the Rabinowitz Committee to the real estate sharks and contractors - NIS 700 million.
4. Cutting ministry budgets. And don't be taken in with ministers' tears. There are superfluous ministries that should be closed, such as religious affairs, there are ministries which could be combined to avoid an overlap and there are local authorities which should be amalgamated.
5. The number of yeshiva students who receive monthly stipends from the Religious Affairs Ministry has risen dramatically in recent years, and it is clear that some exist only on paper. The number stands at 220,000 today, and the taxpayer does not have sufficient strength to make a living for such a vast number of parasites who live at the expense of the public, without working.
6. Every year, wages in the public sector rise automatically by 3 percent due to promotions and seniority pay. Therefore, public-sector pay should be frozen, thereby saving NIS 1.3 billion.
7. A security levy. Even without a levy, the working public's tax burden is too high and encourages emigration. So this is a bad idea. The only consolation - a levy is temporary.
8. Defense tax. The difference between this and the levy is that this is long term, and therefore, worse.
9. Compulsory loan. This is a dreadful solution, since a loan has all the bad qualities of a tax, and, in addition, there is the problem of implementation. With a loan, the budget deficit doesn't even drop since it is money that eventually needs to be repaid.
10. Increasing the budget deficit. This is the absolute worst solution, because a state that plans a deficit larger than 3 percent GDP, after finishing 2001 with a deficit of 4.5 percent, is a dangerous state that you wouldn't want to trade with, to invest in or to lend to, except at clearance prices.