Dream Diem / A Close Look at Public-sector Salaries

The CEO only pays tax on the cheaper of his two company cars. IAI: It's normal practice.

Israel Aerospace Industries chief executive Yitzhak Nissan has been at his post for five years, and for four of those he earned a relatively meager salary compared to his peers in the public sector - NIS 45,000 a month. He was given a raise bringing his salary to NIS 64,000 a month this year.

This week, Nissan found himself at the center of a public storm over alleged irregularities in his use of a company car. Finance Ministry sources say Nissan actually has two company cars, but only pays tax on the value of the less expensive one.

The company doesn't dispute this.

In an official response, the IAI argued that this has been a norm for decades. The Finance Ministry responded that a thorough investigation is needed of the benefits the company grants its workers.

Nissan argues that he never meant to be deceitful, but the Finance Ministry responded that given the significant publicity dedicated to corporate vehicle usage taxes over the past several years, this argument is hard to accept.

Based on IAI's response, Nissan used the Peugeot 407 while he was a VP, and kept it once becoming CEO. A year and a half after he took up the position, the board of directors decided he should have a more upscale car for work purposes.

"Thus the board continued maintaining working practices that applied to CEOs over the past 20 years. Thus, the company put at the CEO's service a Volvo that is registered to the company, which the CEO uses for work purposes, including getting to and from the office. Among other uses, the car is used to transport the CEO's senior guests. In addition, the CEO was given use of a less expensive car, first a Peugeot 407 and later a Chevrolet, which the CEO uses for personal travel," stated the company.

Over the past few weeks, it emerged that Nissan was paying taxes on the value of only the Chevrolet.

The Finance Ministry stated that he should be paying NIS 120,000 in usage fees for the years when he had two cars. IAI argues that the ministry needs to deduct the four months of every year that the CEO is abroad, thus making the owed fee much less than NIS 1,000 a month.