The Arnona Fund is indeed a Band-Aid on cancer, but opposing it is also an act of deception and deception. The lack of proper discourse on the correct economic policy is not a result of reality, but a deliberate distortion of agents of ignorance and interest groups. In order to understand the Arnona tax fund at all, we need to go back and understand the autoimmune disease of the local government, or more precisely, the cluster of diseases.
The first disease is NIMBY disease - not in my back yard, meaning "not in my back yard". Residents of a city, any city, want to keep foreigners away. Residents oppose density and high-rise construction, oppose the construction of jobs (because they already have, and industrial zones will bring foreigners into their city), oppose infrastructure work. Everyone wants to live in a pastoral and quiet place, preferably fenced. The Nimbi is a very powerful political force, pressuring elected officials to prevent residential and sometimes industrial construction.
Blocking residential construction reduces the supply of housing and makes apartments very expensive, which works for the benefit of those who already have an apartment. Mayors are attentive to residents' demands to halt development, and this is compounded by small-big politics.
A mayor is elected by residents who know him. Of course, he will want to be re-elected, but residents who will be added as a result of the new construction do not know him, and may be his opponents - he has no idea who will come as a result of the new construction and what complaints they will have. Therefore, a mayor who approves construction is nothing short of a political suicide.
The second disease is the political power of residents in matters of taxation. Residents do not want to pay high municipal taxes, but want to receive many services from the municipality. According to the Knesset Information Center, every new resident of the city creates a new deficit of NIS 770 a year. The simple economic solution is to adjust municipal taxes to the expenses of the cities, which, as a bonus, would also create a debate about waste and corruption in the local authorities. But the economic solution will always lose to the political interest.
The political solution to this deficit is twofold: first, mayors refrain even more from residential construction; And secondly, the cities are looting businesses.
Instead of an Israeli family paying municipal taxes that reflect the municipality's investment in residents, an Israeli family is forced to pay more in a restaurant, bank and store. The Israeli family also earns less, because employers have huge municipal tax expenses. This problem creates a distortion, because not all municipalities are equal in terms of their ability to loot businesses. The Tel Aviv Municipality enjoys being a high-tech and service center, but the municipal taxes collected from these entities come not only from the labor of Tel Aviv residents, but from all residents of the state. When I travel to the editorial board of the newspaper on bus 190 from Rishon to Tel Aviv, soldiers travel with me to the Kirya, high-tech people to Rothschild and teenagers to Azrieli. But these will be Tel Aviv residents who will benefit from the taxes on the value that Rishon residents produce.
The third disease concerns soils. Industrial zones, which are very profitable for municipalities, were allocated without geographical or employment logic but according to a political key. Kibbutzim and cities that were close to Mapai still enjoy net revenues, thanks to a corrupt and racist committee for drawing urban boundaries that operated 60 years ago.
The fourth disease is the political pressure on the government to give discounts to entire sectors: ultra-Orthodox, students, veterans and others. Any body that can unite will receive a property tax discount due to political pressure, and others will pay the price.
The Arnona fund comes to balance the first, second and third distortions slightly - but not the fourth. Under the cover of the political mess, opposing it is an attempt to perpetuate deep-rooted looting of businesses in favor of pressure groups. The right thing is to be consistent between residents' property taxes and municipal services. In the absence of political courage, the Arnona Fund is a reasonable solution.
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