Public’s Right to Know Gets Break on Tax Breaks

YERUSHALAYIM -

In a decision hailed by the financial daily Globes as a victory for freedom of information, the Tel Aviv District Court ruled on Monday that the Ministry of Finance and the Tax Authority must disclose information about which companies have enjoyed big tax breaks in recent years.

The newspaper itself had brought a petition to release data concerning the large companies that benefited from tax easements under the Law for the Encouragement of Capital Investment from 2006 to 2012.

Judge Dr. Michal Agmon-Gonen vigorously rejected the argument of the Ministry of Finance and the Tax Authority that the confidentiality of such information is protected by the Income Tax Code.

The government was given seven days to hand over a list of the ten companies that received the largest tax breaks in each year, and the amount of the tax break.

Judge Agmon-Gonen acknowledged that this was not much time, but said, “The respondents have been aware of the demand for a long time, and the timing of the delivery of the information is important. The court’s ruling was also given within seven days.”

Among the companies that the ruling covers are some of Israel’s largest, including Teva Pharmaceutical, Israel Chemicals, Check Point Software, Iscar, and Intel Israel, which are thought to have received breaks.

“At the center of the case in favor of delivery of the requested information is the public interest in knowing. The information of which disclosure is sought is public information in the clearest sense, since the tax breaks awarded under the Law for the Encouragement of Capital Investment originate in public money that is awarded annually by administrative decisions, and which the Tax Authority distributes as the public’s emissary,” Judge Agmon-Gonen stated in her decision.

Furthermore, the judge characterized the information as “public property in the full sense of the term. Every Israeli citizen has the right to know the amount of tax breaks awarded under the Law for the Encouragement of Capital Investment to leading companies in the economy, when these tax breaks, which exceeded NIS 5 billion in 2010, affect the state budget and come at the expense of the public.”

She explained that a company that seeks to benefit from the Law for the Encouragement of Capital Investments at the expense of the state budget puts itself in the public or quasi-public sphere, which requires the publication of the information on the tax breaks. “It is right and proper that public money is not distributed in the dark under the Law for the Encouragement of Capital Investment, and there can be no doubt that there is great public interest in the possibility of the public examining and overseeing the process of granting tax breaks,” she said.