Paying without our knowing
It's bad enough to work hard all month and then see that they've slashed a third to half of your salary for income tax, national insurance premiums and health tax - and on top of that they hit you for value added tax on everything you spend.
It's bad enough to work hard all month and then see that they've slashed a third to half of your salary for income tax, national insurance premiums and health tax - and on top of that they hit you for value added tax on everything you spend. These levies, however, are only the visible taxes that have been approved by the Knesset and pay for public services like education, defense, welfare and infrastructure. Even more annoying are the invisible taxes that the Knesset has never approved; let's call them "monopoly taxes."
The most infuriating monopoly is the Israel Electric Corporation. Recently the World Bank examined the IEC's situation, at the company's own request. It found that the IEC and other monopolistic electric companies (it studied six) have a similar number of workers, but the IEC's payroll costs per capita are 25 to 38 percent higher.
But why compare with other monopolies in South Korea, the Czech Republic, the Republic of Ireland, Malaysia, Greece and Portugal? Maybe the corruption there is just as bad. Another report, by the international consulting firm KPMG, found that the IEC's corporate structure is cumbersome and outrageously inefficient, with 2,000 superfluous personnel. Not only do people at the IEC earn inflated salaries, there are far too many of them. And we the consumers bear the costs in our electric bills. That's the IEC monopoly tax.
The second most infuriating government monopoly is Mekorot, the national water company. At this firm as well, too many employees enjoy astonishingly good salaries at a great expense to consumers. Mekorot now wants to build a desalination plant, but it insists on charging more for the water it produces.
Although in the past it boasted that it would be able to build and run such plants more efficiently than any private entrepreneur, private desalination plants are now up and running, and every time Mekorot tries to set up a plant, through outside companies, it runs into trouble. Now it wants to open a plant in Ashdod that will charge NIS 2.86 per cubic meter of water. But private producers are willing to charge only NIS 2.36. Why should we have to pay half a shekel more? Because that's the Mekorot monopoly tax.
Israel's defense suppliers also collect invisible taxes from us all. Over the years they have taken billions from the state. Israel Military Industries, for example, has received NIS 6 billion since 1990 (the treasury claims that the figure is NIS 10 billion). But despite these vast sums, the company's plight has gone from bad to worse, and this year it will show another loss.
According to its recovery plan, IMI should cut 950 workers from its 3,400-strong workforce. To do so, it is demanding NIS 1 billion from the state and another NIS 700 million as a safety net in case of further dismissals. The recovery program has been frozen because it doesn't fit with the political interests of Defense Minister Ehud Barak and Histadrut labor federation chief Ofer Eini. They are blocking the recovery because it's not their problem if we go on paying the IMI monopoly tax.
Another monopoly is the Bank of Israel. It's the sole arbiter of monetary policy and supervision of the banks. It can also print as much money for itself as it likes - this is clearly seen in the salaries and perks its employees enjoy, some 250 of whom earn more than the Finance Ministry's director general.
But this doesn't stop the bank's governor, Stanley Fischer, from insisting that these salaries not come under the aegis of the treasury official in charge of civil service wages. Rather, they should be set by a secret "board of governors" with the prime minister as the final arbiter, Fischer says. And that, of course is a surefire recipe for perpetuating the scandalous wages paid for by the Bank of Israel monopoly tax.
The story is similar at the Israel Broadcasting Authority, which also has many redundant employees, at the Israel Airports Authority, and of course at the seaports as well. All these monopolies are not just inefficient, they collect invisible monopoly taxes from us every day. This is more infuriating than all the other taxes we have to pay.