Democratic Palestine : 12 (ص 17)
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- Democratic Palestine : 12 (ص 17)
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The Budget Crisis
Reality and Prospects
In the context of analyzing the Israeli economy and its crisis, this article deals specifically with the state
budget. In coming issues, we will explore other aspects of the Israeli economy, especially its depen-
dence on US imperialism. Please note that in the article below, the revenues referred to do not include
foreign aid, i.e., the massive injections, mainly from the US, without which the Zionist state could not sur-
vive.
The Israeli government plays an in-
fluential role in the economic and finan-
cial activity of the Zionist state. During
the past 5 years, state revenues have
reached 72% of the gross national pro-
duct (GNP), while expenditures have
reached 47% of the GNP. As a result of
government activity, the deficit has
enlarged to a great extent, reaching
16% of the GNP in the budgets of 1980/
81 - 1984/85.
The 1984/85 budget
As was the case with previous
budgets, the 1984/85 budget was pre-
pared in an atmosphere of increasing
doubts about revenues, in view of high
inflation. The 1984/85 budget planned to
decrease the deficit by 4% of the GNP
by decreasing expenditures and
revenues by 6% and 2%, respectively.
The primary results of the implementa-
tion of the 1984/85 budget indicate dete-
rioration. The financial activities of the
government show that the deficit is
much greater than was expected, reach-
ing its highest peak since the budget of
1973/74, and 6% higher than the plan-
ned deficit. Expenditure has increased
by 8% in real terms and has passed the
planned amount by 15%.
The 1985/86 budget
This budget was planned under cir-
cumstances of continuing economic and
financial crisis and high inflation. The
main aims of this budget were: (1) to
improve the balance of payments; (2) to
decrease inflation by decreasing the
surplus demand and the amount of
money printed. To achieve those aims,
many measures were taken in the way of
collecting taxes and avoiding waste.
These measures included:
1) Imposing a one-time tax on commer-
cial assets like buildings, stores,
machines and private cars. (The
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revenue from this is expected to reach $
250 million.)
2) Enforcing stricter measures with
regard to tax-collecting from companies,
cancelling privileges formerly granted,
e.g., the law of taxation under inflation.
(Expected revenue from this source is $
350 million.)
3) Taxation of the welfare money of
families with more than three children.
4) Imposing new taxes on people travel-
ling abroad.
5) Increasing the rates of other taxes.
General trends of revenues
Revenues ranged from 45 to 50%
of the GNP in the last five years. The
1967 occupation only served to necces-
sitate the increase of taxation, a burden
whose signs are obvious. The revenues
- Steadily rising since the early 1970s -
reached a peak in the year 1982/83,
comprising 51% of the GNP - anegative
sign since the bulk of the revenue is from
taxes. This later dropped to 45% of the
GNP during 1984/85. Experts estimate
that the revenues are to comprise 48%
of the GNP during 1985/86 period.
General trends of expenditure
The amount of government expen-
diture in the Zionist state is very high. It
has increased sharply since 1980/81,
jumping from 65% to 72% of the GNP in
two years. The budget of 1985/86 pro-
poses to reduce expenditure by 10%.
The most important item on the a-
genda of government expenditure in the
Zionist state is military expenditure. The
military budget ranged from 20 to 26% of
the GNP during the past five years. This
rate is 3-10 times the rate of military
expenditure in the industrialized capital-
ist countries.
The deficit which has accumulated
over the years has forced the govern-
ment to borrow large sums of money
from various sources. The government's
domestic debt in the Zionist state is esti-
mated to be 144% of the GNP for the
year 1983/84, while the external debt
has increased to 77% of the GNP for the
same year.
So far, the many attempts to lighten
the burden of the Israeli economy have
failed. Nor can they be expected to suc-
ceed as long as this economy is based
on directing a great proportion of its
means to war and aggression. When
planning the 1985/86 budget, the gov-
ernment reached the conciusion that
reduction of the budget deficit is a pre-
condition for (a) reducing inflation, (b)
reducing debt services, (c) reducing cur-
rent credit by reduction of local demand.
Another way the Zionist govern-
ment will try to lighten the economic bur-
den is by reducing the real value of
wages through increased taxation and
cutting subsidies. This aims to increase
the market competitiveness of Israeli
goods and improve the condition of the
budget. Moreover, an increase in the
rate of unemployment is also expected
during 1985/86.
In short, the Zionist entity will con-
tinue to suffer from economic crisis. Any
attempt to solve its economic problems
will be at the expense of the Palestinian
masses under occupation, who will suf-
fer the brunt of Zionist economic solu-
tions. Added to this, the Israeli economy
also seeks refuge in the huge monetary
aid offered by the USA at the expense of
US taxpayers. @
17 - هو جزء من
- Democratic Palestine : 12
- تاريخ
- نوفمبر ١٩٨٥
- المنشئ
- Popular Front for the Liberation of Palestine (PFLP)
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