Shinui demands tax cut as condition for joining gov't

Shinui demands tax cut as condition for joining gov't
By Yossi Verter, Ha'aretz Correspondent, and Ha'aretz Service

The Shinui Party is demanding a tax cut for the middle class and a ban on foreign workers entering the country - unless they work in agriculture and food services - as conditions for joining a government under Prime Minister Ariel Sharon.

The demands were delivered Sunday morning by MK Avraham Poraz, No. 2 on the Shinui list, in a meeting with the director of the Prime Minister's Office, Avigdor Yitzhaki. Poraz presented Shinui's demands in the economic and social spheres as part of the negotiations on joining the government.

Senior Likud Party officials estimated over the weekend that at this stage the chances were not great that Shinui would join the government. According to them, Shinui's demands will keep Shas, United Torah Judaism and the National Religious Party outside the government, and in such a case the prime minister would be compelled to prefer the ultra-Orthodox and right-wing parties.

Sharon met with Shinui Chairman MK Yosef (Tommy) Lapid on Friday, and the two agreed to assemble teams for coalition negotiations.

On Monday, Sharon is scheduled to meet with Labor Party Chairman Amram Mitzna and will invite him to join a unity government. Associates of the prime minister believe that Labor is unlikely to agree, but that it is still a possibility.

"Messages have been sent between the sides and we are awaiting responses," they said. "It will take time, but we don't have time."

The open conflict between the religious parties and this newly successful conservative anti-religious party makes me very nervous. It's bad enough to have anti-religious discrimination coming from the Labour left.

At times the religious parties can be a pain in the neck, to be sure, but they are a fundamental part of the Israeli state. Without religion, what Israel be? One would hope to see greater understanding, not greater polarization. Maybe if Sharon passes his mantle on to Netanyahu in a few years things can still be repaired.

To give you an idea of the economic situation in Israel, here is a sampling from Globes, Israel's equivalent to the Wall Street Journal:

Cellcom president and CEO Dr. Yitzhak Peterburg today ordered management to institute 300 more lay-offs, cut salaries, and reduce employee benefits, including company cars, this week.

These measures are the part of the company’s new plan, drawn up in the past 10 days, and slated for immediate implementation. The plan includes a reduction in the subsidy for telephones, another rise in the company rates (probably not in the near future), opening Cellcom’s contracts with suppliers, transferring work from external contractors to company employees, opening channels to retain customers, and an emphasis on speedy installing and absorption of content, video, Internet, and location-based services.

Broadband solutions provider Terayon (Nasdaq: TERN) announced on Thursday that its revenue dropped 68% in the fourth quarter, to $25.3 million, compared with revenue of $80.2 million for the same period in 2001.

The net loss for the fourth quarter widened to $20.5 million, compared to a net loss of $6.2 million for the same period in 2001. The loss per share in the fourth quarter was $0.28, beating analysts’ consensus forecasts that loss would be $0.33.

For the first quarter of 2003, Terayon expects revenue to be in the range of $22 million to $30 million, and net loss per share to be in the range of $0.25 to $0.34.

Zoran (Nasdaq: ZRAN) shares plunged 21% on Friday after the chip maker announced in its fourth quarter results that profit in 2003 would miss analysts’ estimates.

Israel is not a nation that needs to be importing workers. Israel needs to continue to encourage aliyah (Jewish immigration) for obvious demographic reasons and needs to concetrate on finding new olim (immigrants) and their existing population adequate work.

Well it is not a zero sum game. Sometimes importing productive workers generates economic activity that reduces unemployment, not increases it. And then one must consider the long term as well as the short term. In any event, if unemployment is so high, what is the incentive for companies to hire foreign workers, unless they are more productive for what they are paid? As a practical matter, one would think the recession is cutting off the demand for them anyway. I suppose Arafat has achieved one of his goals via the violence in helping to tank Israel's economy.

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