Focus / Sharon's Word Means Zilch

Two weeks ago, the phone rang at the home of Finance Ministry Director General Ohad Marani. Those were the days when Prime Minister Ariel Sharon wasn't talking to his Finance Minister, Silvan Shalom; so Marani was selected as a go-between.

Sharon phoned Marani to express his view that more than ever before, he was convinced that the Negev Law was wrong, a misguided distortion which provides tax breaks and subsidies primarily to the rich; and so the Finance Ministry should step on the gas pedal and explain to the public why the law should be suspended, the prime minister concluded.

A few days before this phone call, on December 24, 2001, the government authorized a budget cut of NIS 6.15 billion. Ariel Sharon, along with Shalom, Defense Minister Benjamin Ben-Eliezer and Foreign Minister Shimon Peres voted for the reductions, which in essence repealed the Negev Law.

Throughout the past month the prime minister reiterated that he will revoke all the "private laws," such as the Negev Law and the Large Families Law, which grant special tax breaks and subsidies to select groups. Sharon vowed that he would wrest Knesset approval for the budget reduction package which the government approved, since Israel's government must be protected against the danger of crisis and collapse.

Two-and-a-half weeks ago, when he appeared at a press conference with Bank Governor David Klein, Sharon affirmed triumphantly that he would carry out all of the government's budget-slashing decisions, and he personally would take care of the repeal of the Negev Law and the Large Families Law. On the basis of this promise, Klein reduced interest rates 2 percent.

But how much are Sharon's vows and commitments worth? Nothing. Zilch.

Last Friday, facing the moment of truth in the budget approval count-down, Sharon buckled. He didn't stand up to pressure exerted by the Labor party, and also by Negev residents (including Likud members who live in the south). He climbed high on the ladder to toss down promises of budget austerity and economic reform. And then, last Friday, Sharon came tumbling down on his head.

The Negev Law confers benefits in three ways: tax breaks, assistance to home buyers and incentives for capital investment. Under the compromise forged on Friday, the tax breaks will be reduced somewhat; yet the two other benefits will continue, as they were, in 2002. The bottom line is then that instead of costing the public NIS 700 million, the Negev Law will come with a price tag of NIS 550 million in 2002.

Tax breaks for high-income earners will go down a little. For instance, Be'er Sheva Mayor Yaakov Terner, or Ben-Gurion University of the Negev President Avishai Braverman will "only" receive tax breaks this year of NIS 1,050, instead of the NIS 1,680 monthly discounts they received in the past. And Labor MK Weizman Shiri, a Negev resident, will "only" get a monthly tax break of NIS 315, instead of NIS 700. Are these the sort of people who deserve tax breaks at all, at a time when the state doesn't have money for its disabled?

Tax breaks for persons with monthly incomes no higher than NIS 10,500 will be virtually untouched. Last year, a Be'er Sheva resident who earned NIS 10,500 a month received a NIS 1,260 tax break. This year his or her tax discount will be NIS 1,050. Not much of a change.

The public will have to pay for these concessions on the Negev Law. Now that it is clear that Sharon doesn't have the stomach to ward off special interest lobbying, that his word counts for zilch, he will be forced to allocate many more millions when he relents and agrees to Shas demands. Shas wants to nix the government decision to repeal the Large Families Law (increasing payments to families starting with the fifth child).

If Sharon surrenders to Shas, so as to preserve his "political alliance" with this party, then the disabled protesters aren't going to be disposed to compromise about their demands. During their last protest action (in 1999), disabled protesters won allocations of NIS 160 million. Now a NIS 300 million allocation boost will not suffice for them.

As one concession snowballs into the next, Sharon's situation gets worse. When the head of a government fails to show leadership and back up his words with actions, pressures exerted against him become ever more insufferable.