Israeli Tax Officials To Strike Over Authority Consolidation Plans

by Lorys Charalambous, Tax-News.com, Cyprus

29 November 2007

As the beleaguered Israel Tax Authority seemingly lurches from one crisis to another, workers at the ITA have threatened to come out on strike in protest at plans to merge the income tax and VAT departments.

Nachum Friedlov, head of the worker's committee of the income tax department told the Jerusalem Post that the ITA "is already in a state of complete crisis operating without leadership for months" and that Finance Minister Ronnie Bar-On should reject recommendations to unite the two divisions.

In February, the government ordered the establishment of a committee to find a permanent replacement for disgraced ITA head Jackie Matza, who had resigned following the exposure of a massive corruption scandal in which bribes were taken from business to secure favourable appointments within the ITA. One of the terms of reference for this committee, headed up by accountant, Yitzhak Suari, was to investigate whether the tax authority would function better as a unified entity or with separate income tax and VAT divisions.

In October, the Suari committee recommended a merger of the departments, with an income tax commissioner appointed to serve as director of the Tax Authority. It also recommended establishing the customs unit as an independent agency, redefining its unit’s role and possibly allocating it to another ministerial portfolio.

However, according to Friedlov, the ITA's lack of direction has led to plummeting confidence and lower tax collection, and any further upheaval should be avoided.

"We - the income tax and the customs & VAT worker's committees - have notified the Finance Ministry of our opposition to the recommendations and demand that the search committee terminates the search for a new director," he told the Jerusalem Post.

The Ministry of Finance has yet to decide whether to take up the recommendations of the Suari committee.

The threat of strike action by ITA workers has followed closely in the wake of new revelations of corruption with the tax authority. Last month, six ITA employees, in addition to one employee of the Jerusalem Municipality, were arrested on by police on suspicion of accepting bribes from businesses to reduce income tax payments, cancel property liens, terminate tax investigations and pay tax refunds. More arrests are expected to follow as the police widen their investigation into the affair.

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