The decisions of the Tax Authority of the Tax Authority for 2018, published yesterday, once again showed the outrageous forgiveness of the state in the face of tax evaders. Although a ransom is a legitimate tool for concluding investigative files as an alternative to a criminal proceeding, and is paid in parallel with the unpaid timely tax payment, the fact that most cases are closed with fines that seem negligible compared to the amount and severity of the offense proves
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The file contains 89 decisions in income tax and real estate tax cases, 124 decisions in customs and VAT cases and 3 joint decisions in customs and VAT and income tax. The highest ransom, in the amount of NIS 900,000, was imposed on Alon Barzani and the Barzani Transportation Company for unlawfully deducting input tax in the amount of NIS 609,000. Prof. Moti Ravid, the former director of Maayan Hayeshua Hospital, paid a ransom of NIS 250,000 for evading transactions with a tax liability similar to the amount of the ransom paid.
The best example of the lack of deterrence is among apartment renters who have not paid tax as required. As in the case of planning and construction offenses, here too the state almost gives the feeling that tax evasions are normative, of people who may have just “forgotten” that tax should be paid, and in any case the punishment is particularly light.
In Israel, a tax exemption on renting an apartment has been granted for decades up to an amount that is updated annually, and currently stands at NIS 5,070 per month, which makes the ability to locate tenants who enjoy income above the same exemption threshold and do not report as required for income tax particularly complicated. It is not for nothing that the Ministry of Finance occasionally pulls out a plan to tax apartments from the first shekel, a move that will make it possible to easily identify those who rent an apartment, but the fear that part of the tax will be passed on to tenants makes them fold their tail very quickly. Meanwhile, out of 700,000-600,000 apartment renters, most of whom do not come close to the tax ceiling, the tax authority samples several hundred of them each year – with tax officials at the tax authority trying to locate suspects who pass the same ceiling in advance (apartment owners in expensive areas, for example).
Since the loophole actually calls for a thief, the most effective tool is deterrence, but the decisions of the ransom committee are too forgiving. In 2018, 25 ransom decisions were issued regarding the disappearance of rental income in the total amount of NIS 18.4 million. The ransom given to those 25 offenders amounted to only NIS 3.2 million, ie an average of NIS 126.7 thousand per offender.
Examples: Former MK Estherina Tarterman was questioned by the tax authority on suspicion of evading NIS 185,000 in rental income from apartments in the years 2012-2008. The ransom she was required to pay was NIS 35,000, less than 7 months’ rent. NIS from renting apartments in 2015-2007, and paid a ransom of NIS 285,000. Quite a bit, but in many Western countries she would pay a much higher amount, and also sit behind bars.