He may be leaving after a taxing term as Israel's accountant general at the Finance Ministry, but Yaron Zelekha is not going quietly into the night. "Taxing reimbursement of medical costs to judges arouses the concern that the state will have to indemnify them for the tax payment, and thus in any case have to bear that cost itself," the central courts management said about the outgoing accountant general's decision to slap tax on sums that former judges, and other Very Important Persons, get back from the state for their medical costs.
Zelekha delivered his directives regarding tax on reimbursed medical costs just before announcing his resignation. The courts management argues that the arrangement reimbursing judges for medical costs dates from the 1950s, and the issue of paying tax on that "income" never arose before.
The upshot is that the state covers the medical costs of about 600 former VIPs and their spouses. The list includes former presidents, ministers, Knesset members and deputy ministers appointed before 1986, and judges and qadis appointed before 1995. The perk also applies to about 250 incumbent judges who took their seats before July 1995.
If we look more closely at the numbers, judges pay NIS 199 a month for medical insurance. Once Zelekha's decision comes into force, they will pay tax of about NIS 600 a month over and above that NIS 199 monthly medical insurance payment.
By the way, even though naturally each person incurs different medical expenses, the decision fell to impose a blanket tax. That figure of NIS 600 a month, or in reality slightly less, is based on a calculation of the value of the perk to these Very Important People.
The judges are the only ones who pay any medical insurance at all, and the NIS 600 a month applies only to them. The other VIPs pay no medical insurance, and would pay tax on the entire state reimbursement.
Zelekha took his decision to tax reimbursed medical costs based on expert opinions given to the Tax Authority. Moreover, he means to impose the tax retroactively from the start of 2007.
However, Zelekha ordered that the VIPs and applicable officials be given a choice. They can accept his proposal to tax their reimbursements, or they can forgo the entire arrangement covering their medical costs. They can become like the people who elected them, or served under them, or simply existed, and take care of their medical insurance needs by themselves. Judges who decide to waive his arrangement won't have to pay that NIS 199 a month any more.
The courts management argued that the healthcare insurance payments that judges were charged, had not been acknowledged as costs for tax purposes over the years. It was an insurance policy that the state elected to apply to the judges and other officers, the management said. Late last week Zelekha rejected that position, and ruled that reimbursements were in effect extra pay for the judges.
Knesset sources sneered yesterday that the effort by the courts' management to have the tax indemnified was chutzpah, and added that the Knesset Finance Committee - which is responsible for setting the employment terms of Israel's judges - would never agree. The sources also said that if the subject ever came up for discussion in the Finance Committee, then the panel would do well to reopen all the employment terms of the judges.
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