Shohat's
Last Gift
Zev Golan, IASPS Associate Director
All
the newspapers have reported the end of the nationwide Histadrut strike. Yet
everyone has huge piles of garbage in front of his house. For though the
strike has ended, the strike continues.
Finance
Minister Shohat signed a deal with the Histadrut giving public sector
employees a pay hike of 3.6%. But the municipalities refused to abide by the
deal, because they said they have no money. They asked the Finance Ministry
to pay the cost (an estimated NIS 3.5 billion). But the finance minister,
who signed the deal, refused to pay for it. The Histadrut doesn’t care,
they know somebody
will pay for it; so they ended their strike, while allowing the
municipalities to let the garbage pile up higher.
Shohat
didn’t leave the municipalities to twist in the wind; he offered advice:
Raise the arnona,
the property tax, he declared. Wait…is this sounding familiar? Perhaps
readers of the NBN recall just this month, Shohat tried to pass an arnona
rate hike through the Knesset, but failed. The law allows the arnona
to rise by the rate of inflation. Inflation was zero, but the government
introduced a bill to allow a tax hike anyway. The Knesset, in a rare display
of concern for the taxpayer, refused. The government then proposed allowing
collection of the arnona
without a rate hike, and due to the crumbling coalition, this too failed to
pass. So the municipalities acted on their own and without a legal basis,
started collecting the tax and even managed to raise the rate, in a
backhanded sort of way. See the NBN, “Illegal
taxes.”
On
the subject of the Knesset and fiscal responsibility or the lack thereof,
let us note that on January 24, Ha’aretz
reported “100-150 million NIS annual loss to municipalities”
stemming from a bill that just became law, granting discounts from the
property improvement tax. MK Meir Porush introduced and won passage of a law
allowing owners of medium-sized apartments to improve their units without
paying a tax currently set at 50% of the value of the improvement. As the
article records the problem, lawmakers did not suggest to municipalities how
to make up for the estimated NIS 150 million they will “lose.”
This
is one case where the NBN does not blame the lawmakers. For their
irresponsibility, see the NBN, “Lawlessness
and Populism,” and “A
Guide to Populist Legislation,” in the 1998 IASPS
Scorecard on the Israeli Economy. In this case one would do better to wonder
how the state can “lose” income earned by taxpayers. Should a taxpaying
homeowner consider it an a priori judgment that if he improves his own home,
the state has a right to double the cost of that improvement and charge
special taxes? Perhaps the prime minister has special rights on bridal
nights as well.
The
proper response of both newspapers and municipalities should have been: they
will balance their budgets. If they have less income, they will cut
expenses. Fire employees. Remain within legal limits for salaries paid their
senior bureaucrats (that would be a revolutionary idea). Have their mayors
take fewer taxpayer-paid trips around the world. All these are good
possibilities. Instead, the question asked is how they
will make up for “lost” income. The expenses are apparently sacrosanct;
the only question is, under what guise to get the money from taxpayers.
Shohat
could have said: I had to cut this deal, I cannot pay for it without raising
taxes, I won’t do that; you cannot pay for it without raising taxes and
you cannot do that; thus you and I will have to cut expenses elsewhere, in
order to pay the bill. Instead, the deal Shohat cut with the Histadrut
became an excuse for Shohat to push for his already rejected arnona
tax hike.
One
more sad note: the deal Shohat cut binds the Histadrut to not strike for 6
months. Considering the elections scheduled for this week, the next strike
in 6 months will be the problem of a different finance minister. Which
brings to mind a deal put forth by former prime minister Peres before the
elections before last, for the Hizbullah not to attack from Lebanon until
after the elections.
Apres
moi, le deluge.
