CITY COUNCIL moved last week to create a tax-amnesty program in hopes of making a dent in the nearly $1 billion in outstanding taxes owed to the city.

Amnesty programs usually generate unexpected revenue, and this one will coincide with a state-sponsored amnesty in May. The city amnesty will cover all taxes, including parking, business-privilege and realty-transfer taxes, but the biggest category by far is the 156,000 outstanding real-estate tax bills. The outstanding bill, including interest and penalties, for those in arrears with property taxes, hovers around a jaw-dropping $390 million.

The business-privilege tax is also up there, with $302 million outstanding in taxes, penalties and interest. The amnesty will let people to pay their full tax and half the interest. The rest, including all penalties, will be waived.

Is this a good idea? It's certainly an idea that provides bitter medicine: It can cure some revenue shortfalls, but it leaves a bad taste in the mouths of those who work hard to pay their taxes on time.

But we should also be paying closer attention to why people aren't paying their bills. Is it just a coincidence that property taxes are a big category for scofflaws when the city's property-tax system and the Board of Revision of Taxes are so dysfunctional? As long as it's widely perceived to be a dishonest system, it shouldn't surprise us that so many people feel less than compelled to pay their taxes.

This is not to say that people don't have the obligation to pay taxes, but collecting unpaid taxes is expensive; City Council has to approve spending $12 million for advertising and an outside firm to collect, but the larger expense is in the cuts to services and cost of borrowing to make up for the shortfall.

Councilwoman Joan Krajewski advertised her interest in this with an op-ed (in this paper) in August. Usually, it's best not to telegraph the possibility of amnesty because people tend to hold off on making payments; since word spread of possible amnesty, delinquent tax payments dried up.

Krajewski's plea for an amnesty program relied heavily on the story of a grandma struggling to stay in her house, but who could no longer afford the penalties and interest.

Penalties and interest aren't the problem, though. Without the stick of high penalties, many taxpayers would feel no urgency to pay their tax bills on time.

Bad enough that one in five property owners are already delinquent on their taxes in the city. Let's not coddle them too much.