Smuggling 6 tons of tobacco in artificial pebbles. September 18, 2023/Tax Authority Spokesperson
"The beautician who kept two separate diaries and the credit terminal that transmits directly to the tax advisor." That was the headline of the spokeswoman for the Tax Authority, who tried to sell the great success of her tax audit to the media.
What is the scope? Well - this is also written in the same message. In March, four (4!) audit operations were held: in Ramla, Jerusalem, Beit Shemesh, Ramat Gan and Be'er Sheva. 144 businesses were inspected, of which 64 were found to have deficiencies of not recording receipts or not keeping books.
In other words, if we treat the tax authority's audit as a representative sample, then about 40% of the businesses in Israel evade tax! That is, almost one out of two independents...!
Even as someone who lives among his people it sounds crazy. Therefore, I will cautiously assume that not all of those 64 out of 144 acted with the aim of defrauding the tax authorities and that for at least some of them these are honest mistakes that arise from the cumbersome structure of registration and reporting that is required of a business owner in Israel.
At the same time, after I made such a "presumption of quantity" for us, the self-employed public in Israel, it is necessary to assume that there are also business owners who evade tax, but were not even caught in the inspection conducted by the Authority simply because on that given day they did not commit any offense...
the following claim may be heard Populist, but the list of the cities that came up in luck, as usual, shows increased enforcement against the electrician who was tempted to pocket a NIS 200 bill in cash for a visit, instead of writing a receipt of NIS 234, after tax. It is possible that he even told the owner of the broken electrical cabinet that this was the amount - and on his own initiative offered him a cash bill, just to save 34 shekels. We know exactly how the method works.
That is, it is not a large contractor or a factory owner who makes tens and hundreds of millions, but again those who are struggling to survive. Of course, this does not justify their actions, but it does cast doubt on the "field operations" policy of the Tax Authority.
Tax evasion is not only a violation of the law, but also a violation of the mutual guarantee. Still, aren't the IRS once again taking care of the small independents and the weak?/ShutterStock
Know the enemy
And from the general to the specific: in the case of that beautician from Jerusalem, an "observation" was even conducted (in the words of the report) from which she received an income of, hold fast - 160 shekels - without being legally registered in the business books. Furthermore, a more in-depth examination revealed a failure to register approximately NIS 7,000 in 2023 and another approximately NIS 10,000 during the first quarter of 2024.
That's not all: a dentist from intelligence was caught in similar circumstances - and several credit transactions that were not legally registered among the business's income were discovered . How much, you ask? 5 transactions this year, 4 last year (which amounted to less than NIS 8,000) and another one from 2022 for about NIS 2,000. I mean, once again there are stories here whose value is in the deterrence they are supposed to generate towards other business owners and not really a rescue for the state coffers.
The fact that, according to the Tax Authority's own data, more than 40% of the subjects were found to be tax evaders, shows that deterrence, who knows what, is not here... The
"excellent cycle" is a business owner from Bnei Brak, whose credit clearing terminal was not connected to the cash register at all The register of the business. Here it already appears, on the face of it, that there is an attempt to mislead the tax authorities: NIS 1,300 was not reported legally, according to the inspection, during the two business days that were inspected. The excuse was also original, when the business owner claimed that the transactions may not be registered at the register, but the terminal is connected directly to his tax consultant's office, where they are registered according to the law... Blessed is the believer.
More in Walla!
How do you turn a plastic package into a flower pot?
In cooperation with the Tamir Recycling Corporation
Dentist. The leaves struck a NIS 2,000 deal in 2022.../ShutterStock, bezikus
A country within a country
Our attitude, the Jews, to tax offenses is complex and is fueled both by a long-standing diasporic tradition in which a significant part of the Jewish communities were minorities persecuted by the state, and by a tribal structure within Israeli society, in which various communities within it do not see themselves as part of the state (mainly this is said in parts of the ultra-Orthodox and Arab sectors ) and are the result of a relatively light punishment:
even a business owner in the United States (for example) does not enjoy sharing the fruits of his labor with the local or federal authorities, but he knows that if he accidentally offers a casual customer a payment in cash, without a receipt, he may find himself behind bars , together with murderers, rapists and drug dealers.
There are regulated structures in Israel whose entire purpose is to defraud the tax authorities. Among
the rich, this is about creative tax planning
, a chain of companies some of which operate abroad and hold accounts in destinations that are considered tax havens. You will say that in the computerized and online age it should not be a problem to trace these (even without flying, let's say to the Cayman Islands or the British branch of the Virgin Islands), This is true of course, but come on - we are talking about the same authority whose investigators barely made it to Beit Shemesh.
Among the ultra-Orthodox, there is extensive black economy activity going on through the Gamachim
. Don't get me wrong: giving benevolence is a mitzvah and I wish every community in Israel would learn from ultra-Orthodox society how to take care of orphans and widows, how to save money from your children in order to donate to charity, how to wrap and support those whose fate has not improved for them.
And after we are done admiring, without cynicism, God forbid, we will turn our gaze to an entire industry, a large part of it in cash, that generates billions, parts of which are "gray" and parts of which are really black - being conduits for money laundering for criminal organizations, whose leaders receive forgiveness for their crimes from corrupt rabbis, As if they were Al Pacino as Michael Corleone in the Vatican City, in the third part of the "Godfather" trilogy.
Want to catch the big tax evaders? Start with the accounting firms of the rich/ShutterStock
Sometimes things get ridiculous, mainly because of the increased power of ultra-Orthodox businessmen in the political system. Do you remember the happy Corona days? An entire country was forced to stay no more than 100 meters away from home, families celebrated the Passover Seder in Zoom, raids were conducted on those who sinned by jogging or surfing, as if they were terrorists and those who took the mask off the tip of their nose, to breathe a little - risked a fine.
Throughout most of this period, there was activity in Israel, such that it imported new variants of the disease into Israel. Why? Because there are sectors, especially a very specific sector in Israel, that depends on a regular supply of cash. This is not an attempt to criticize an important part of Israeli society, but only to show How devastating is the fact that the state still allows the existence of trading in cash on such a scale - and not only in terms of taxation.
A black economy based on cash allows large parts of the Arab sector to exist as a state within a state, controlled by criminal organizations that become banks/ShutterStock
on cash and sector
Stopping the use of cash (not completely, but a significant reduction in its use) could have also eliminated the black economy in the Arab sector, parts of which operate as closed economic units where cash changes hands without any record of a transaction.
Here, too, the immediate consequences of such a step could have been severe, but in the long term, a great favor would have accrued to the entire Israeli society, including the Arab society itself. The necessity to open a bank account and use debit cards instead of cash would have resulted in the regulation of the salary structure, registration of a regular salary would have resulted in the ability to get a mortgage, directly affects the regulation of the registration of houses and apartments according to the law - and is an important part of the regulation of many mechanisms that today allow large parts of Arab society to exist as a state within A country, part of the former is under the control of criminal organizations (which, within a cash-based society, have themselves become banks).
Those who raise taxes without being caught, earn a relatively small profit, but participate in a phenomenon that hurts us all, including their children's teacher/ShutterStock
The Great Tax Robbery
Whoever thinks that the state budget has nothing to do with the citizens' willingness to cooperate with tax evasion is wrong. About two months ago, the Knesset passed a scandalous state budget, one that is all about robbing the hardworking person and diverting a large part of his income, which he worked hard for, to various sectors that have become a millstone on the neck of the manufacturing community, whose weight in terms of political influence is in retreat.
It is easy to point the finger at the ultra-Orthodox here, too easy. Why? Because to this list should be added an inflated public apparatus - from entire departments in the local government that are not functioning to a government apparatus with dozens of ministers in their bureaus. This mechanism, it must be remembered, exists now under the Netanyahu government, but it also existed under the Bennett-Lapid government. In other words - those who expect that a political change will shake the branch on which those free eaters are sitting, are wrong.
There will be those who will add to this list even the holy of holies, apparently or not, of the Israeli public - the Israel Defense Forces. It is true that he has real needs that are important for our survival in the hostile space.
At the same time, it is necessary to remember and remind that this is also an inflated mechanism, one that keeps within it not only the best but also the mediocre ones who enjoy sailing conditions - and this is true, when you see how the army was discovered in its ruins on the day of the order, not at the level of the common soldier or the junior officer, but Precisely in the performance of the most senior and most rewarded, I feel like adding him to the list of those who enjoy the fruits of our labor without any ability to supervise.
And after all of this, it is necessary to remember and remind that the current state budget is perhaps a model of political corruption, but even in an era that has improved from this, there will always be someone who will not be satisfied with the routing of the budgets that consist of all of our taxes. Therefore, in order to maintain the democratic character of the country, a tax revolt is not an option: lest the public interest (allegedly) become the last refuge of the villain, the tax raisers.
It is not only a perceived offense against the state that is actually a social offense, one that harms our family, friends and neighbors, but also harms all of us: every shekel we fraudulently clear is a shekel that doctors, teachers, social workers, police officers and so on lack.
Try to remember this the next time the beautician from Jerusalem or the dentist from Modi'in winks and offers you a "discount" on the amount of VAT for a cash payment.
More on the same topic:
Taxes Authority
Internal Revenue Service
beautician