The data and recommendations on the tax breaks that the Strauss Dairy demands for relocating its plant from Nahariya to Ahihud will be presented to Finance Minister Silvan Shalom and Housing Minister Natan Sharansky tomorrow. The story begins in 1994, when Strauss decided to relocate the historic plant from Nahariya to the industrial area of Ahihud, near Carmiel. In line with Israeli tradition, Strauss applied to be recognized as an approved enterprise in a development-A (high priority) area, a status which would grant it extensive tax breaks. But the Industry and Trade Ministry's Investment Center rejected the request, explaining that the dairy sector is a cartel and local dairies are protected because no dairy imports are allowed.
In any normal country that would be the end of that. But not here, because we have this odd creature called "an appellate committee", comprising mainly businessmen from the private sector. Strauss appealed to the committee, and was granted the coveted tax breaks - provided that the dairy export 15-20 percent of its products.
Years went by and it transpired that Strauss did not export a single product. So the Investment Center once again determined that Strauss had failed to meet the required criteria and so is not eligible to any tax break. Makes perfect sense, doesn't it? But then Strauss went back to the appellate committee, which promptly waived the condition and approved the NIS 40-60 million tax break. Small wonder, since most committee members are businessmen who don't want to be on the bad side of the Strausses. And after all, one of the Strausses may in future be on the committee that determines their own profits.
When I asked Industry and Trade Minister Dalia Itzik about this, she agreed with me that the committee's very existence created a conflict of interests, and that she was planning to disperse it. Apparently, since then Itzik forgot all about it.
But the Strausses had to overcome another hurdle. Committee resolutions are only effective if endorsed by the finance minister and by the minister of industry and trade. But Itzik got cold feet, and in order not to make a move that would be unfavorable to her friend Michael Strauss, she disqualified herself from deciding the matter. And thus, the hot potato was tossed over to Natan Sharansky. So he and Silvan Shalom will tomorrow be determining the fate of the NIS 40-60 million.
Israel's industry owes a lot to the Strauss family, and Ofra Strauss has recently taken over as CEO from her father, Michael, beginning the third generation of Strausses to run the plant - in and of itself a welcome tradition. Raya Strauss, Michael's sister, has said: "Our parents started as Zionist farmers, and we continue as manufacturers because to us industry is today's pioneer activity. It is industry that will guarantee Israel's economic independence" - oh so true, but nevertheless, it does not justify the tax break.
All of the treasury's senior officials hold that Strauss must not be given the tax break. It would therefore be so much more honorable for everyone if Strauss withdraws its application today.
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