Former Israeli Revenue Chief Urges 'Softly Softly' Approach Over Taxes

by Robert Lee, Tax-News.com, London

18 July 2002

Israel's former Revenue Commissioner, Yoram Gabai has stressed the need for the Finance Ministry's proposed tax reforms to be introduced gradually, in order to avoid creating resentment, and turning Israel into a nation of tax evaders.

In a document submitted to the Knesset Finance Committe, Mr Gabai, a special adviser to the panel warned that the tools to trap tax evaders and enforce the tax code are currently fairly limited, and recommended a number of changes to the reforms currently being debated, in order to make them more palatable to Israeli taxpayers.

With regard to the capital market 'volume tax', he suggested a reduction from the 1% level recommended by the Rabinowitz committee to 0.5%, arguing that given the speed of turnover and the current low levels of market activity, 'a reasonable tax rate that is not heavy enough to damage regular activity should be calculated'.

The former Revenue Commissioner also recommended that any taxes imposed on the public offerings of technology companies should be graduated over several years, and recommended a three year implementation period for the imposition of tax on overseas income received by immigrants.

Meanwhile, it emerged this week that the US Department of Commerce has rescinded its warning - issued in June 2000 - against doing financial business with Israeli companies and individuals. This follows the region's recent removal from the Financial Action Task Force's money laundering 'blacklist'.

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