Ministry of Finance officials recommend cutting National Insurance Institute (NII) payments, including child allowances, by a further NIS 1 billion, as part of the NII and labor market reform. Under the proposal, child allowances will be selectively paid to working parents through income tax credits, in order to encourage their entry into the labor pool. Another proposal is to eliminate the child allowance for the first two children.
Other NII payments, including old-age pensions, will be frozen, and therefore fall in real terms. The intention is to try to use an income structure to determine NII payments. Henceforth, NII payments will be paid only to Israeli citizens actually residing in the country. It is not clear if the erosion in NII payments will apply to disability payments.
Prime Minister Ariel Sharon postponed yesterday morning’s scheduled marathon discussion on the economic emergency plan with Minister of Finance Silvan Shalom and top Ministry of Finance officials, due to Sharon’s heavy schedule. Sharon needed to deal with other state and political issues, including uniting Likud ranks, after the coalition agreements left Likud ministers without important portfolios.
It is not known at this time if the postponement is merely technical, or until the new government is sworn in and a minister of finance appointed.
Published by Globes [online] - www.globes.co.il - on February 25, 2003