The government prides itself - justifiably so - on not raising taxes. Indeed, tax hikes during recession (even one purportedly over but still affecting all-too-many households quite adversely) is nothing short of daft.
Nevertheless, although income tax isn't going up, many of us will soon find our private budgets harder than ever to balance. Depending on where we live, many of us might end up shelling out lots more in taxes.
How is that possible if the Treasury routinely praises itself for not increasing our burden? Simple: local taxes, as well as assorted levies and fees, are about to balloon out of all seeming proportion.
We may not pay more to the single largest revenuer, but we'll pay much more to most others.
Besides steep rises in water and utility prices, local authorities are getting in on the act too. Ironically, the wealthiest, most solvent and most centrally located municipalities are those preparing the highest increases. Givatayim, for instance, is upping local rates by a whopping 10%. Ra'anana's increase stands at 7.13%. Hot on its heels is Ramat Gan with 6.13%. A substantial raise is also in Holon's pipelines. All these cities are solidly in the black and derive additional incomes from large prosperous industrial and commercial zones.
But this is just a sample. The Union of Local Authorities projects that scores of municipalities already plan to do likewise. In some, the decision has already been taken but not yet publicized. In all, there is hardly any publicity for the hikes, even where they have already been approved by the individual municipal executives. It's almost as if the design is to do everything on the sly and spring the hikes on unsuspecting taxpayers when they receive their 2010 bills.
From a broad economic perspective these increases are extremely ill-timed and ill-conceived. The antidote to recession is to strengthen the citizenry's spending power and thereby transfuse the marketplace. Higher taxation of any type is undesirable as it reduces money supplies. Higher local taxes, therefore, are every bit as detrimental as higher income tax.
Moreover, we are not out of the economic woods. The stock market may be upbeat and perky but unemployment is still elevated, household incomes have fallen and small businesses keep suffering.
The cities cite higher expenses - foremost among them water costs - as mandating the hikes. Yet municipalities are notorious water-wasters, many continuing to saturate lawns and parks in blatant disregard of the severe drought. They now also disregard the fact that families will pay exceedingly more for their own water use as of 2010. Thus city residents will also be liable for municipal squandering.
We will likewise be bankrolling pay rises for municipal employees as well as salary increases for elected officials. In cities sporting an excess of deputy mayors this can amount to egregious outlays. Jerusalem, for instance, holds the national record with eight deputy mayors. Ramat Gan has five and Givatayim three. Each deputy mayor, his office and staff deplete municipal coffers by millions. It might be a good idea for the state comptroller to turn his attention to what may underlie municipal tax hikes.
These taxes, furthermore, aren't fully progressive. True, residents of posh areas and larger homes pay more. But beyond that, local taxes are regressive because almost everyone pays and income plays no role except in the dire circumstances of social welfare recipients. The bottom line is a minimum of hundreds of shekels more per dwelling.
It may well be that the Treasury isn't averse to passing the buck to the local authorities and casting them as tax-hiking villains. Yet, while having others take the flak may be convenient in the immediate term, in the long run this counters the logic of our national economic and fiscal policies.
Both the Finance and Interior ministries would be well advised to carefully inspect and monitor municipal taxation. Even if projected hikes are judged somewhat justified, they might at least be mitigated and/or phased. It is wrongheaded to impose such heavy extra burdens on already overburdened families in times of undiminished economic fragility for most.
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