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The state collected less than NIS 250 million in capital gains tax from the more than NIS 55 billion in "theoretical" stock sales conducted via one local bank last month - about 80 percent less than it should have, given the then current tax rate of 15 percent.

"Theoretical" sales are when an investor sells his shares to himself to protect himself against an expected tax increase. In this case, the capital gains tax rose on January 1 from 15 percent to 20 percent for ordinary investors and to 25 percent for major shareholders. Thus by selling their shares to themselves, investors would pay 15 percent tax on all capital gains accrued until the date of the sale, and the higher rate only on gains accrued thereafter.

In total, the state collected only NIS 1 billion-1.5 billion in taxes on theoretical sales totaling NIS 170 billion. According to the banks, this is because most of the sales were conducted by bond-oriented mutual funds, and these funds produced small yields over the last year, of only 5 to 7 percent on average.

The banks added that the state is not the only one that earned less than expected on these sales: The banks themselves collected no more than NIS 30 million in fees, they said. Since the banks' fee is set at 0.2 percent of the value of the sale, total sales of NIS 170 billion should have netted them hundreds of millions of shekels in fees.

However, the banks said, a large portion of the theoretical sales were carried out by mutual fund participants, and for these people, the banks waived the fee. Another large chunk was carried out by controlling shareholders, and since these are big customers, the banks also either waived the fee or offered them substantial discounts.