Comptroller: Israeli Cities Raise Taxes Instead of Chasing Tax Evaders

The comptroller's report also states that some mayors have used municipal resources for election campaigns.

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An aerial view of Tel Aviv, July 7, 2014.Credit: Ofer Vaknin

Cities and towns across the country raise municipal property taxes for residents who already pay rather than compel tax evaders to hand over their share, the State Comptroller’s Office said in a report released Monday.

The local authorities described in the report make no attempt to collect debts for property tax (arnona) payments, which totaled about 27.5 billion shekels ($7 billion) in late 2012.

“The investigation painted a gloomy and worrisome picture of how the local authorities handle the huge number of unpaid arnona debts,” the report said. “A situation in which the local authorities increase the burden on the public by means of exceptional increases in arnona fees, instead of concentrating efforts and resources in order to demand their money and to collect it from those who owe the money, is an improper situation.”

In some cases, local authorities ordered a suspension of debt collection without explaining why, even though they had already hired collection agencies. In other cases, the statute of limitations on the debts has expired.

The investigation also reveals that for years local authorities have not carried out a survey to map assets in the city, leading to a further loss of revenue.

On the other hand, the municipalities grant discounts on arnona in contravention of the regulations and without sufficiently examining the eligibility of those requesting a tax break.

The report says the interior and finance ministries are aware of the lack of uniformity, the bureaucracy and the injustices that characterize the arnona system in the local authorities, and over the years have established many committees to tackle the subject. The most recent and comprehensive committee was set up in 2007, but its recommendations were not submitted or discussed in any forum.

The comptroller’s report also states that some mayors have used municipal resources for election campaigns.

Money for the 2013 mayoral campaigns in Kiryat Gat and Givat Ze’ev was illegally taken from the municipal budget, the report found.

In addition, the Beit She’an municipality paid 20,900 shekels for ads in local newspapers describing the achievements of city hall, accompanied by a photograph of Mayor Jacky Levi, which the comptroller’s report said could be considered election campaign material. The city defended the ad, saying it benefited the public by providing information.