Immigrant Groups Successfully Lobby Tax Reform Change

The tax reform proposal will include one of the major changes for which immigrant groups have been lobbying, Income Tax Commissioner Tali Yaron-Eldar told Ha'aretz yesterday. However, there is no indication in the proposal itself - or in experts' interpretations of the provision - that thechange will actually take effect.

Individual pensions accumulated abroad, and not just employer-based ones, will qualify for "special treatment" under the proposal approved by the Knesset Finance Committee Monday, said Yaron-Eldar. She expects the law to pass as is when the Knesset votes on the tax reforms tomorrow.

The definition of pensions for the purpose of the tax reform, she said, is money accumulated from working abroad that was periodically deposited in any retirement fund during the time an immigrant received income from working. "It doesn't matter if you get [the pension money] from an employer or not from an employer, individual or not individual," she said. Under that interpretation, all retirement funds would be taxed at the same rate here as they would have been taxed in the country of origin had the immigrants been living there. If Yaron-Eldar's interpretation of the provision is accurate, the change would be "an important factor" in the law and its approach to immigrants, said Eli Kazhdan, executive director of Yisrael b'Aliyah. When immigrants have already retired, he said, "that's not the age where you have to get them anxious about how they're going to survive for the rest of their lives." But Kazhdan said he has not heard anything about a change in the pension provision.

In addition, Tax Reform Committee Chairman Yair Rabinovitch last week referred to "employer-based pension income" in a Knesset committee meeting on the matter, and the widespread understanding of the proposal is that only pensions received directly from an employer would generate special treatment. The language of the relevant portion of the law has not at this point been broadened to indicate otherwise.