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Israeli gov't set to approve new austerity plan

(Xinhua)

08:59, July 31, 2012

JERUSALEM, July 30 (Xinhua) -- Israeli ministers are set to approve Monday an austerity plan, which includes tax hikes and budget cuts, as part of the efforts to curb Israel's burgeoning 2012 deficit.

According to Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz's plan, there will be a 5-percent cut in the ministries' budget (a total of 175 million U.S. dollars).

The government will also approve a 3-percent cut to the 2013 ministry spending (a 500-million-dollar reduction) and a 1-percent increase in income tax for those earning above average salaries ( more than 2,000 U.S. dollars).

These moves are a part of a series of steps government officials say will boost the state's revenues by 3.5 billion dollars next year.

Another part of the plan includes collecting nearly 1 billion dollars owed by large corporations who were exempt from paying taxes according to agreements with them.

Treasury officials also said the cuts are necessary to cover new expenses like preventing African migrants' entry from the Sinai border and enhancing the firefighting service, etc.

"This package is supposed to provide a solution for dealing with the deficit, in order to protect Israel's credit rating, investments and economy," Steinitz told Army Radio on Monday.

"We are dealing with the deficit so we won't end up like Ireland, Spain or Greece. If we don't do this now, we'll end up paying more. We need to do this to protect the Israeli economy," he added.

Netanyahu himself said Monday morning that the government will take more from those who have more, and less from those who have less, according to Army Radio.

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