A new storm is brewing between the Ministry of Finance and local authorities as mayors seek NIS 1 billion in compensation for storm damage, while the ministry fails to understand what the brouhaha is about and what the compensation is needed for.
The Ministry of Finance said today that the damage to private vehicles and homes should be covered by private insurance companies, since most people insure these assets, including mortgage-holders, as the banks require them to have structural insurance.
The Ministry of Finance admits that the government did compensate victims who lost their homes in the Carmel fire disaster and did not have household insurance. But in cases of natural disasters, there is no legal mechanism for the transfer of money from the government to individuals, except during wartime, when the Tax Authority's property tax unit almost automatically provides compensation. The ministry notes, however, that in contrast to the victims of the Carmel fire, this week's storm killed no one.
The ministry also says that the government's automatic compensation mechanism in such causes creates an incentive for people not to insure their property.
As for damage to municipal infrastructures, the Ministry of Finance believes that the storm is not a macroeconomic event, and that the Ministry of Interior should transfer to the local authorities the money needed to deal with specific problems in the relevant cities. "The Ministry of Interior will transfer the money, and if there are extreme cases, we will settle accounts with it and transfer the money, but at this stage, we see no need to do this," a top Ministry of Finance official told "Globes".
The Ministry of Finance is ignoring a demand by Association of Local Authorities chairman Shlomo Bohbot for a NIS 1 billion transfer to cover storm damage. "Bohbot wants a billion shekels every month, and each time for a different reason. There is no reason to comment or respond. We know the accuracy of Bohbot's calculations," said a top ministry official.
Published by Globes [online], Israel business news - www.globes-online.com - on January 10, 2013
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