Last update - 00:00 08/03/2007
Viewpoint / Municipal taxes - double or nothing
By Omer Moav
Histadrut labor federation chair Ofer Eini was roundly criticized for his decision not to call a general strike just because Prime Minister Ehud Olmert promised to take care of municipal workers' unpaid wages. Eini, however, realizes that such a strike would be unjustified, and he was right to postpone it. Eini knows the Israeli public is repeatedly falling victim to a simple sting by local authority heads, who abuse their workers by not paying salaries and misuse the strike weapon provided by the Histadrut.
Some of the local authorities manage their budgets irresponsibly, are inefficient at collecting municipal taxes and water bills, and use salary money to cover other expenditures. When the coffers are empty, the authority heads lobby the Histadrut to pressure the government for more.
The Finance Ministry is in no hurry to pay up, demanding first that the local authorities implement plans to balance their budgets, reduce expenses and collect more taxes.
Some of the local authorities now crying for money have already received generous assistance. Following a crisis in 2004, the treasury funneled more than NIS 1.5 billion to local authorities. Some of the authorities did not follow through with their recovery plans and went back to withholding workers' wages, not collecting taxes and maintaining superfluous staff, partially due to nepotism and cronyism. Those local authorities continue to use their workers and the Histadrut to strengthen their position in negotiations with the treasury over new recovery plans.
As a result, some Israeli citizens are not paying any municipal taxes, while others are paying twice - once to their municipality, and again via the taxes transferred to the failing local authorities.
The Histadrut is a vital link in the cycle of corrupt municipal management, which extorts massive sums from the state coffers. Striking for wages is justified, but if the Histadrut were not part of the picture, the local authorities would not be able to threaten the government with a general strike. Withholding wages would no longer be an effective weapon for obtaining more money from the government, mainly because the workers would move their struggle into the labor courts and the bailiff's office.
When the workers know they will ultimately receive their salaries, plus a 25-percent premium for the delay, they don't just toss in the towel and quit the city that isn't paying on time.
And when the Histadrut presents itself as the workers' champion against the hard-hearted treasury, don't forget the union's role in worsening matters. First of all, when talks finally do start about restructuring the sick cities, the union objects to plans to streamline the staff and cut pay, even when the base pay is over the top. Secondly, the Histadrut doesn't hesitate to call a strike in local authorities, even those making a sincere effort to extract themselves from the mud.
The author is a senior member of the Institute for Economic and Social Policy at the Shalem Center, and a professor of economics at the Hebrew University.