High municipal tax rates and deteriorating services by the local authorities are forcing factories to switch locations to improved industrial areas, a new survey finds.
"Municipal tax rates for the industry increased by 3.08 percent over the past year making the industry pay NIS 1.5 billion, while at the same time, the level of services provided by the same local authorities deteriorated," said Pinchas Kimmelman, chairman of the Forum of Finance Managers at the Manufacturers' Association of Israel and vice-president of Osem Finance, referring to the Forum's survey conducted among 112 factories across the country's local authorities.
According to the findings of the survey, the satisfaction level with regard to the services provided by the local authorities over the past year dropped further to 2.41 from 2.61 a year earlier. The satisfaction level was measured on a scale of one to five, where one is "bad" and five is "excellent."
The lowest satisfaction level of 2.32 was reported from factories and industry in the South, while industrial areas in the center of the country had an average grade of 2.65 and areas in the North had an average grade of 2.76.
"The low level of services by the local authorities has an impact on 60% of the factories when deciding over whether to move their factories to improved industrial areas," said Kimmelman. "And for about 80% of the factories the municipal tax rate level impacts their decision over whether to move their factories to another industrial area."
Kimmelman, therefore, is calling upon the Minister of Interior to determine in the form of legislation a list of basic services that each local authority would have to provide in return for municipal tax payments. Included on that list is the proper removal of waste, as many factories today are forced to privately finance removal of their waste or pay a separate fee to local authorities in addition to the municipal tax fee.
Water and sewage is another item on the proposed list, which should be provided by local authorities as many factories are dependent on continuous water supply at suitable pressure levels so that they can secure regular production processes without interruptions.