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Mayors snarl at plan to kill city tax By Rotem Sella Tags: municipal tax  A committee appointed by Finance Minister Roni Bar-On is proposing slashing municipal taxes, a possibility that has mayors and local authority heads up in arms over the threat to their autonomy. The two-stage proposal, one of several interim recommendations slated for release in the coming days, calls for ministries and government bodies to put the municipal tax money into a government fund that the state would distribute to local authorities, especially those in outlying areas. In the second stage, all municipal taxes - including for individual residents - would be abolished and value-added tax would be increased instead. The committee, headed by former income tax commissioner Ehud Barzily, is due to make its final recommendations by the end of the year. The panel received an unlimited mandate to submit its recommendations on income rates and certain components of municipal taxes. Advertisement Municipal governments in central Israel enjoy a high concentration of government ministries, state institutions and military bases located within their boundaries, all of which translate into high municipal tax payments. Local authorities see the diversion of resources from the center to the periphery as a mortal blow to the autonomy of local government. "We have no faith in the government," said Adi Eldar, chairman of the Union of Local Authorities. "The government has made promises about money in the past that was taken from local governments and appropriated for itself. We don't believe that the money from this fund will reach local governments. The fund will be taken over by the government, and the money allocated according to its own set of priorities." Even municipal leaders who seem to stand to gain from a redistribution of municipal tax have come out against the plan. "We will lose control over city taxes in the form of VAT when collection is turned over to VAT," said Be'er Sheva Mayor Yaakov Turner. Tel Aviv-Jaffa Mayor Ron Huldai, who heads a group of municipalities that finance themselves without supplementary funding from the state coffers, said the abolition of municipal taxes spells an end to local government. "A government that cannot legislate or collect taxes is not a government," he said. The treasury views the creation of a government fund as part of Bar-On's vision to encourage the growth of outlying areas. In a recent speech at the Caesarea Economic Conference, Bar-On said implementing a social policy would be possible "only through the diversion of substantial resources in the areas of education, welfare, employment, infrastructure and transportation, from the center [of the country] to outlying areas." Such diversion of resources will be "painful," said Bar-On, especially for residents of central Israel, who will be forced to give up a significant part of the resources they have previously been allocated. Bookmark to del.icio.us   A hero or a pharaoh? An Iranian film praising Sadat's assassin has touched off a row between Egypt and Iran. Primary colors Barack Obama looks to reassure Jews of his commitment to Israeli security.

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