2015 was a record year for tax collection in Israel. The Tax Authority collected a total of NIS 270 billion ($68.7 billion) in taxes last year, an NIS 8.2 billion increase over the NIS 261.8 billion shekels ($66.6 billion) in taxes collected in 2014, until now the record-setting year.
Of that, NIS 136.8 billion came from direct (payroll and corporate) taxes, while NIS 126.5 billion came from indirect (sales and other) taxes. The government collected NIS 6.7 billion from licenses and permits as well. December alone saw the government increase its tax take by NIS 20 billion, as tax authorities increased their collections of outstanding debts and ran dozens of operations to ferret out tax cheats.
Last year, the Tax Authority hired 364 new workers, most of whom were sent into the field to inspect the books of “suspicious” businesses, many in the retail sector. The inspections yielded tens of millions of shekels in settlements, as well as the conviction of numerous tax cheats. According to Authority officials, the goal for 2016 is to collect at least NIS 277 billion in taxes – a goal that will be more difficult to achieve, since the value added tax (VAT) was reduced from 18% to 17% last September.
But the government seeks to go further, upping the penalties for tax evasion – a move that businesses feel is excessive and will end up criminalizing even minor offenses, forcing them to hire lawyers to fight nuisance complaints likely to be brought against them.
Over the weekend, a group of tax lawyers representing hundreds of business owners sent a letter to MK Nissan Slomiansky, chairman of the Knesset Constitutional Committee, protesting the proposal. “Any update must take into account all possible results of the legislation, and its impact on the ability of companies to do business,” the attorneys wrote.