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A congestion charge? "Bad solution that hurts the weaker sections" - Walla! Of money

2021-09-25T02:42:39.850Z

The former prime minister's economic adviser, Prof. Avi Simhon, on the intention to anchor the congestion charge in the Arrangements Law: "The Budget Division holds the model from both ends"



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A congestion charge?

"Bad solution that hurts the weaker sections"

Following the Finance Ministry's plan to combat traffic congestion unveiled at Walla, the former prime minister's economic adviser, Prof. Avi Simhon, responds to the intention to anchor the congestion charge in the Arrangements Law: "The budget department holds the model at both ends."

The Treasury responds: "The imposition of congestion charges is a small part of a broad plan"

Tags

  • Budget Division

  • light rail

  • traffic jams

  • Traffic jams

  • Minister of Finance

  • Benjamin Netanyahu

  • Avigdor Lieberman

Sonia Gorodisky

Friday, 24 September 2021, 09:45 Updated: 10:13

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In exactly one week from today, the Tishrei holidays will end, most Israelis will return from vacations and trips in Israel and around the world, the children will return to the frames and the traffic jams will return to their typical places in recent years - especially Gush Dan and the central area.



Standing in traffic jams wastes valuable time, causes air pollution and increases the chance of an accident.

According to the Ministry of Finance, the annual cost of traffic jams to the economy is NIS 40 billion a year, and if nothing changes at the end of the current decade, we will reach an astronomical cost of NIS 70 billion a year.



Despite the dire situation on the roads, the Israeli car market is booming every year and traffic jams are only getting longer.

Given that Israel's infrastructure projects are progressing lazily, the obvious and perhaps almost the only solution to the plague of traffic jams, at least in the medium term, is congestion charges.



Previous governments, led by Benjamin Netanyahu, have not promoted the issue of congestion charges, and some would say that the current finance minister has enough courage to promote such an unpopular initiative, from which other politicians have fled like wildfire.

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To the full article

Prof. Avi Simhon: "The Treasury does not care" (Photo: Flash 90, Yonatan Zindel)

Professor Avi Simhon, former chairman of the National Economic Council and Netanyahu's former adviser, is not one of them. In a conversation with "Walla! Money, "he explains why the congestion tax has not been introduced in Israel to this day:



" The congestion tax is a bad idea that hurts the middle class and the weak, so no finance minister was willing to adopt it, even though the budget department raised it every year. This is something that is bad - and also bad for the economy in general. I think these people do not understand, they think in simplistic models where it is a good thing. But the reality is more complex. "



Simhon explains:" It takes 37 shekels from people whose incomes are not high to enter Tel Aviv, because now taking a bus from a place like Lod, for example, to a workplace in Tel Aviv that is not Azrieli Towers is a very long story. "



-

But the money This will be invested in the development of public transport ...



"You do not need this money to invest in the development of public transportation. The State of Israel today pays one percent on the loans it takes for ten years. One percent! It can afford to increase spending without taking the money from poor people who want to enter Tel Aviv. There is no need.



We have enough money to invest in all the infrastructure projects. Same thing with the metro. The thought that it will not happen that the municipalities will finance half the project is stupid, no less. It will not happen in practice. In practice the project will be delayed because now It's 100%, after that it will generate so much tax revenue. "



-

All the 150 billion shekels? Do we have that money?



"Obviously! Obviously we have. It's 150 over a decade. Do you know how much the state's revenue has increased beyond expectations? Today we collect tens of billions in taxes more than we expected before the crisis. What they thought in 2019 would be collected in 2021 - today we collect tens of billions more.

The signing of the new entry agreement to Jerusalem, 2014: Yair Lapid was Minister of Finance, Israel Katz Minister of Transportation and Nir Barkat - Mayor of Jerusalem. According to Simhon, no incentive was given for early termination.

No need to tax

Prof. Simhon expands: "The capital market believes in us, the interest rate that the state pays today for ten years is one percent. If the metro is a project, which according to the accountant, should give a return of more than 10% per year, every sensible person should run for it. "But here the budget department is stopped, maybe even those will fund, maybe even these, it's delaying and we are stuck with too little infrastructure than we need. And now they say, it's good to impose a congestion tax to fund it. Nonsense. No need."



In the

world the congestion tax works well.



"The problem with the budget department specifically and now it has also become the policy of the Ministry of Finance that it holds the model at both ends. On the one hand, they say the cost of size is NIS 40 billion a year. On the other hand, when they are told let's put another billion to promote projects transportation is very large - they are not ready. I'll give you two examples which will reduce the crowded and you can anticipate them.



one- it

The red line of the light rail in Tel Aviv

, there is a financial dispute between one of the companies that establishes the line and the state, the result of which is a postponement of the red line for more than a year.

It could have been solved at a cost of hundreds of millions, but the budget department does not want to put the money, it prefers to postpone the project for another year.



A second example - is

the new entrance to Jerusalem

- it is possible with a really small amount to bring it forward by two years, the Ministry of Finance is not willing to put that money.

The contract says the road should open on November 23, they have already finished the tunnel, they are just not in a hurry.

It was possible to give them a small financial incentive, and the Treasury does not talk to them at all, because it does not care. "

The light rail test ride: The Treasury believes it will operate on the original date, November 2022 (Photo: Reuven Castro)

Finance: "The program will attach Israel to the most advanced countries in the world"

The Ministry of Finance did not like the criticism leveled at Simhon, saying in response:



"The imposition of congestion charges is a small part of a broad plan that will allow the country's citizens to significantly improve their mobility to employment centers. in the coming years.



the program will attach to Israel and developed countries around the world posed by public transport top priority and the framework will be strengthened existing lines, will operate new lines will be arranged shuttles to employment centers hangars park and go outside the circle No. congestion.



there is a consensus among economists and transportation experts in the country and abroad about the advantages of implementing Congestion Fees These benefits have been proven in various parts of the world, including London, Singapore, Milan and Stockholm.



The allegations regarding the lack of budget for project promotion indicate a lack of familiarity with the data.

The budget of the Ministry of Transportation has increased in an unprecedented way in recent years from NIS 20 billion in 2019 to NIS 37 billion in 2022.



Regarding

the red line in Tel Aviv

, we do not know what pieces of information Prof. Simhon is based on, but according to the latest data provided to us By the professionals in the Ministry of Transportation and in Nata, the company responsible for carrying out the project, the line is expected to open on the updated deadline - November 2022, and no professional has raised any possibility to advance this date through budget additions.



As for the Road 16 project,

the new entrance to Jerusalem

, there is a built-in incentive for the concessionaire to finish early, following which the opening of the project was brought forward from the initial date. "

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Source: walla

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