Comptroller: Tax Breaks Can’t Go On

Israeli State Comptroller Yosef Shapira. (Uri Lenz/FLASH90)
Israeli State Comptroller Yosef Shapira. (Uri Lenz/FLASH90)

State Comptroller Joseph Shapira added his voice on Tuesday to the chorus of critics of tax breaks for big companies, in a year when ordinary Israelis are asked to bear an increased burden in defraying the national debt.

“It is not reasonable” for this to continue, Shapira said, while “portions of the population are struggling under the burden of taxes and the high cost of living.”

Shapira took the government to task for its failure to ascertain the efficacy of the current tax structure, suggesting that the Finance Ministry has allowed the situation to get out of control.

The officials responsible for measuring the effectiveness of the Law for the Encouragement of Capital Investment, which provides for the leniencies in question, have “placed no measurable targets to ensure that the law’s objectives were met.”

The Ministry’s inability to determine if reducing the tax breaks will increase tax revenues “does not mean that it is possible and necessary to grant unlimited tax breaks without adequate oversight on their use,” he wrote.

Shapira urged a systematic assessment of the cost of the tax breaks track. “The granting of unlimited tax breaks without a cost or effectiveness review and without examining alternatives is uneconomic conduct that harms the public interest.”

Addressing governmental performance in other areas, Shapira warned that the Energy and Water Ministry and the government generally must take the necessary steps, “without any further delay,” regarding the country’s location and extraction of its natural gas resources off the coast to “prevent a large ecological disaster” in the Mediterranean Sea.

The report found that consumer protection laws were not protecting consumers. It blames this on the absence of a clear address for consumers to turn to with complaints, lack of enforcement and inadequate deterrence for businesses not to break the law.

Turning to defense, Shapira prodded the authorities to expedite implementation of a classified system to enhance IDF ground forces capabilities that is seven years behind schedule.

And since no comptroller’s report would be complete without bemoaning the over-concentration of wealth, it noted that one quarter of companies listed in Israel are owned by just 25 business groups, and the 10 largest groups make up 30% of the market, among the highest concentrations in the West.

The report also discusses: a mismanaged housing situation, in which badly needed public housing is being misused for offices and vacation homes; deficiencies in public offerings to complete projects on behalf of the state, noting specifically an offering regarding 370 million euros funding relating to Israel Railways; inefficiencies in building a new light rail in Tel Aviv.

The Prime Minister’s Office declined to comment.

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