Welfare slashed in 2007 budget

Histadrut chair threatens general strike; FM decides not to raise taxes.

Histadrut Labor Federation Chairman Ofer Eini responded Tuesday to Finance Minister Avraham Hirchson's budgetary decisions by announcing he would not hesitate to organize a general strike if the finance ministry didn't rescind its one-sided motions. According to Eini, the finance ministry's budget proposal was worse than Netanyahu's. Eini claimed the ministry was behaving like a private business, concerned only with its own interests, and not like an entity meant to serve the public. Meanwhile, Eran Weingarten, director-general of the organization "Latet" ("Giving"), leveled sharp criticism at the government, saying that the finance minister and the Israeli government were offering the 400,000 families living below the poverty line a holiday gift of indifference. Weingarten said that food organizations would strike if a national program to fight poverty were not integrated into the budget plan. Earlier Tuesday, Hirchson announced his decision to grant a "one-time" NIS 3.5 billion supplement to the 2007 budget for the renovation of the north and the replenishing of the IDF's emergency storage and ammunitions supplies. The funds, however, were taken from a planned NIS 3.8 billion cut from the social welfare budget. Allowances for children and the elderly will be frozen at their current amount and will not be renewed according to inflation or the CPI (consumer price index). The minimum wage, according to Hirchson, will stay at its current amount until the beginning of 2008. Widespread disapproval from the Labor and Shas parties forced Hirchson to delay the publication of the 2007 budget Monday, after leaked details were found "unacceptable" by those parties.
  • Analysis: The Treasury boys got it wrong In addition, the finance minister said he would not raise taxes, explaining that "raising the VAT (value added tax) would be ineffective." Speaking to reporters at a press conference, Hirchson vowed he would "not let the State of Israel enter an economic crisis. I will bring Israel to a state of economic growth," he said. Despite his optimism, Hirchson said "the war forced upon us a new set of priorities. Things that were correct during the war are not correct today." The finance minister went on to say that before the war in Lebanon Israel enjoyed a surplus of income, which no longer exists. Those surpluses, explained Hirchson, were used for the physical renovation of northern homes, workers compensations, industrialists, tourists and farmers. "The plan for the rehabilitation of the north obliges us to invest in a new budget of some NIS 1.5 billion, which we didn't plan on. "If the country has extra funds it must save them for a rainy day, and that day has come," he said.