TEL AVIV – The so-called “War on Palestinian Terror” costs mountains of money. The Israeli economy is in tatters and the Palestinian economy is virtually destroyed. The increase in unemployment is unprecedented. International trade, tourism, industrial and agricultural output have suffered not only because of the crisis in the capitalist world, but mainly as a direct result of the Israeli military occupation policy and the defensive resistance struggle of the Palestinians.

Israeli Finance Minister Silvan Shalom, backed by Prime Minister Sharon, has announced his plan to finance this whole economic debacle, which he claims has caused a budgetary deficit of about NIS 13 billion (approximately $2.7 billion).

True, at least for public relations’ sake, the salaries of the ministers and their staff, the Knesset Members, and other high-salaried politicians are planned to be cut somewhat. The budgets of all ministries are supposed to be cut by four percent.

Shalom promised vaguely that when a government commission issues its report recommending raising taxes on stock-exchange and other capitalist superprofits, the government will move to legalize such taxes. But no one believes this will really happen.

How much of these populist promises will remain after the present Knesset debate is a question. But what is sure to become a hard reality is that the main burden of Shalom’s so-called “Emergency Economic Plan,” adopted by the government, 17 to 9, will be paid by the working and unemployed people, old-age pensioners and families with many children, as well as the weaker sections of the middle strata – the already poverty-stricken masses.

Shalom maintained that no new taxes would be levied on lower categories of wages and salaries. But the one percent rise in the Value Added Tax alone, from 17 to 18 percent, will hit anyone who purchases anything, whether luxury or ordinary goods.

Under this plan social welfare, old-age pensions, child allowances and unemployment insurance will be cut, while costs for health care and education will rise. Tax hikes on fuel and gas, electricity and public transport were introduced the day after Shalom’s press announcement.

A spokesperson for the National Insurance Institute said the new regulations would increase child poverty by 25 percent. Almost half the children in the Arab minority belong to this strata.

The chair of the Trade-Union Federation Histadrut, MK Amir Peretz, has declared that the working people will fight these anti-labor “emergency” designs. The Histadrut has already filed a labor dispute declaration, required by law two weeks before strike action. However, after a recent Shalom-Peretz meeting, Shalom promised he would give up his plan to freeze wage increases for the next few years. Peretz has already gone back on his general strike warning, but he continues to talk about strike actions on a lower level.

The communist chair of the Histadrut Trade Union Center, Benjamin Gonen, observed that the government was using its barbaric attack on the Palestinian people as a pretext to increase the taxes on the poor working people, while continuing to exempt the wealthy from paying taxes at all.

Nor are the Israeli peace activists silent. Many thousands of Jewish and Arab Israelis marched April 27 through the important Ibn-Gavirol thoroughfare in Tel-Aviv to a huge rally across from the Defense Ministry, demanding an end to the occupation as well as an end to the government’s attack on working-class living conditions.

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