RAMALLAH, January 8, 2012 (WAFA) – Prime Minister Salam Fayyad said Sunday that he needs $1.1 billion to cover a deficit that was carried from 2010.
Speaking to journalists and column writers in Ramallah, Fayyad said that the deficit in current expenditure has reached $1.1 billion by the end of 2011.
However, he explained, since donor aid for 2011 has reached around $750 million, which was much lower than expected and was the reason for the high deficit, he believes donors will make around this amount in aid for the current year.
This would leave him with only $350 million to cover of what would be left of the deficit, which he said he would try to generate through cuts in expenditure and a restructured taxation system.
Fayyad said that when he gets the money, he will be able to put an end to confusion caused by the financial crisis by paying late bills owed to the private sector and eventually pay back bank loans.
The prime minister, who is also finance minister, has introduced a new income tax law that would allow him to generate more revenues.
The new law increases taxes on people with high income that reaches about 30% for those making over 200,000 shekels a year (over $60,000).
Fayyad defended his tax law saying it does not affect people with low income, but forces those in higher income brackets to pay more.
He said income tax revenues currently amount to only 1.5% of the GDP and only 6% to 7% of the total revenues, which is much lower than most of the region’s countries where income tax revenues make at least 5% of the GDP.
M.S.
