Despite good performance in 2016, to the extent that the country has paid down its debt significantly, the government needs more money – and it intends to get it from people who have managed until now to remain “under the radar” of the Tax Authority. The Authority announced that it has sent out 14,000 letters to Israelis whom it suspects of having more money and higher incomes than they are letting on, and offering them a one-time opportunity to come clean. After that, they will have to face the consequences of their actions.
Among the criteria considered in the decision on whom to dun are the spending and travel habits of candidates. Individuals who travel abroad frequently, or to whom are registered expensive vehicles that seem to outstrip the kind of vehicles someone of their income level would have on average, will find themselves the subject of an investigation unless they pay up.
The reason this is necessary, according to government officials, is tax cuts that are being implemented this year. As of January 1st, taxes on middle-class families were cut, and corporate taxes fell from 25 to 23 percent. “Now we have to ‘refill the bowl’ by expanding the tax base,” officials were quoted by Maariv as saying.
According to the officials quoted, the government’s “great tax hope” – the third apartment tax – is likely to fizzle. Under the tax, which went into effect January 1, landlords will pay a 1-percent tax per month on the assessed value of each home or apartment they own, beginning with the third property, up to a limit of NIS 1,500 per month, a total of NIS 18,000 a year. As the average value of homes in most cities is more than NIS 1.5 million, it is expected that most of the Israelis who will have to pay the tax will pay the full amount. The rule is expected to affect 50,000 people, who own a total of 180,000 homes.
While the tax has the potential to bring in a lot of money, “the likelihood is that we will soon see a large number of fictitious sales, as individuals ‘sell’ their property to friends or relatives to avoid the tax. In the end, little tax will be collected. This tax will not last for the long term. Next year, when campaigns for the next elections heat up, every party except Kulanu (which sponsored the bill) will claim that they were opposed to it.”