Taking Stock / Let's Start With the Kalajis

Amram Kalaji won't appear in this year's tables of record Israeli wage earners. The tables turn up every March in the press, reporting the salaries and perks of managers in publicly-traded companies.

Kalaji draws his salary from the state - NIS 31,000 per month, plus a car, plus a driver, plus a subsidized pension, plus the rest of the perks for a ministry director general - and all that would earn him a respectable spot in the tables.

But if anyone were to try to rank Israeli wage earners according to the ratio of the time they must commit to the job and the salary they get in return, apparently Kalaji would apparently conquer one of the coveted starting slots.

On Wednesday, Ziv Maor revealed here that the former Interior Ministry director general has enjoyed an amazing arrangement since his retirement from office six years ago. Apparently, the Civil Service Commission permitted Kalaji to continue to receive all the benefits and perks of a ministry director general after his retirement, in exchange for his continued service as chairman of the national planning and building council.

Until Kalaji left the office, the director general fulfilled this role as part of his duties. But when Kalaji retired, it was decided to split the job and allow Kalaji to keep the salary and car and driver and so forth, despite the fact that all he would be doing was running a monthly meeting of the council. The result is that for the past six years, the Interior Ministry has borne the cost of two directors general.

There is no doubt that a director general's salary for the chair of a council that convenes once a month is conspicuous and infuriating to every taxpayer. But we can all relax, the Israeli public sector is rife with thousands of Kalajis.

The term "Kalajis" doesn't only refer to those who receive huge remuneration packages, but also to the tremendous bleeding of money into superfluous jobs, inflated staffs, payments to contractors and suppliers who work with the public sector - but mostly to cronies and those who wander freely around the corridors of power.

Kalaji is not the kind to make headlines. The last time he won a mention in the press was after he appeared in court during the trial of Shimon Sheves, the former prime ministerial chief of staff. "Far from confidence-inspiring" was the phrase the judge used for Kalaji contention in court that he didn't remember meeting Sheves, or talking to him about projects for which Sheves's friends were contractors.

But it is symbolic that Kalaji gets director-general perks for chairing the national planning and building council, a job that confers tremendous power on its holder, mainly with contractors and land-owners.

In the past decade, the number of "Kalajis" in the public service has swelled rapidly - the peace process, hi-tech U.S. loan guarantees, the technology bubble, all of these substantially boosted tax revenues for the state and local authorities, allowing them to inflate their apparatus at tremendous rates.

Thousands of 60k salaries

The treasury wages director's report, to be published soon, will again lay out the numbers. There are thousands of workers in monopolies, local authorities, and other institutions who get salaries and pensions that cost the taxpayer NIS 30-60,000 a month.

The time has come to pay up - the private sector is weakened, is laying off employees, is shrinking. In other words, it can no longer haul the yoke of an inflated public bandwagon.

Therefore, the government agrees, "as in every household, the state too must cut expenses".

But where to start cutting? With the Kalajis? With the tens of thousands of huge wage-earners in the inflated public sector? With the millionaire retirees of all the institutions that live off the fat of the taxpayer? With the consultants, suppliers, contractors and other buddies who provide services to the state?

No, the first recommendation in the new budget-cut plan that will bring in the largest sum - NIS 1.5 billion - is slapping VAT on produce. It is difficult to imagine a tax that could be more distorted and infuriating than a VAT on fruit and vegetables. This is not simply because VAT is a bad and unnecessary tax, and its rate in Israel is far too high - but mostly because taxing food produce is taxing the poor.

The money a wealthy family spends on fruit and vegetables is a marginal part of its disposable income. But for poor families, the sum is substantial and the VAT on produce will gouge the disposable income of the weakest sectors.

This is a tough time for Israel, a time of difficult decisions, but as long as the public sector is stuffed chock full of thousands of fat-cat workers and well-padded cronies on huge salaries, one has to be particularly cynical and evil to come up with a budget-cut plan that kicks off with a proposal to impose new taxes on the poorest people.