Ministers to Vote on NIS 10 Million Solution to Bolster Pri Hagalil

Under the new initiative, the industry, finance and justice ministries have crafted a track for investment under the auspices of the Law for the Encouragement of Capital Investment.

The Ministerial Committee for Legislation is set to discuss a new initiative to allow the state to aid a limited number of troubled businesses including Pri Hagalil and its ailing canning factory in Hatzor Haglilit.

The committee will discuss the issue at its weekly meeting on Sunday.

Under the new initiative, the industry, finance and justice ministries have crafted a track for investment under the auspices of the Law for the Encouragement of Capital Investment. The change will not require legislation, only the cabinet's approval.

The proposal will allow the state to transfer to the company an estimated NIS 10 million, 55% of what Pri Hagalil had demanded. The company will get the money even though, in the law, it does not meet the criteria for state grants encouraging investment.

The factory's owners had shut the plant and threatened to fire 220 workers if they did not receive the NIS 18 million they said the Industry, Trade and Labor Ministry had promised them.

Technically, the change would allow the state to provide incentives to continue employing workers in businesses that were bought out of receivership or bankruptcy. State support would be granted only in cases where the workers were employed before the sale and continued to work afterward. The funds would be provided on an individual basis for every worker for up to five years after the purchase of the business.

The funds will come out of the budget of the Investment Center at the Industry, Trade and Labor Ministry. An alternative to aid to Pri Hagalil was raised by MK Moshe Gafni (United Torah Judaism ), the chairman of the Knesset Finance Committee. Gafni would have allowed the law to include many more businesses and cost the treasury hundreds of millions more shekels.

The Pri Hagalil plant has been the focus of a high-profile dispute. Former Industry, Trade and Labor Minister Benjamin Ben-Eliezer admits he made a pledge to give the NIS 18 million grant.

Government officials said the factory never qualified for government assistance regardless of politicians' promises. After shutting the doors a week ago, the owners reopened the factory this week.

Treasury has to make up NIS 350m fuel tax shortfall

Prime Minister Benjamin Netanyahu's decision on Wednesday to keep gasoline prices 10 agorot lower per liter will cost the treasury NIS 300 million to NIS 350 million in lost tax revenue annually.

But Netanyahu said the move was good only for two months, during which the Finance Ministry will prepare a plan to cut the state budget by about the same amount. This implies that the reduction will become permanent after two months and the treasury will have to cut spending instead.

"The prime minister is the one who decides on priorities," said Gal Hershkovitz, the treasury's budgets chief, who will be in charge of the spending cut plan.

He said the treasury and the Prime Minister's Office had discussed the reduced fuel-tax hikes, and the treasury had objected - but Netanyahu made the decision. Treasury officials criticized Netanyahu's decision on Thursday, calling it wrong from an economic standpoint. They said Israeli fuel taxes were not particularly high by international standards.

But Netanyahu made it clear on Thursday that he did not intend to breach the budget framework as a result of the fuel tax cut, despite the growing public protest against high gas prices.

Netanyahu: No reason we can't surpass Britain, France

In advance of his trip to the United States and Canada next week, Netanyahu has been speaking out on the Israeli economy and his plans for economic growth. "There's no reason why we can't eventually surpass Britain and France in GDP per capita," Netanyahu said in an interview with Bloomberg released on Thursday. "We have to keep growing at 5 percent."

"If we are to address our defense needs that we are being challenged with, we have to continue this growth," Bloomberg quoted Netanyahu as saying at a meeting with American Jewish leaders last month. "It is not a question of living standard. It's a question of national security."