ITA Not Worried That Affair Will Affect Revenues

The Israel Tax Authority (ITA) is denying that there is any reason to worry that the various investigations of its senior officials will negatively affect tax collections in 2007.

There are two fears that have been floating around. The first is that the investigations will shut down the effective functioning of the ITA, and will prevent the authority from implementing its efforts to increase enforcement and collection. Secondly, another fear is that the suspicions and investigations will diminish the public's motivation to pay taxes, since it sees tax authorities as corrupt.

The ITA is aware of these problems, but considers the danger to be minimal. The tax collection target for 2007 is NIS 174 billion. This is nominally similar to the 2006 numbers, but is actualy some NIS 10 billion higher.

This is because of the tax reductions which took effect at the beginning of 2007. Also the Iscar sale to Warren Buffett brought in a one-time surge of NIS 4 billion in tax in 2006.

Therefore, the extra revenues needed to close the gap are about NIS 10 billion in 2007. Most of the sum is expected to come as a result of expected economic growth - and the resulting increased tax revenues. But there is some NIS 8 billion that depends on increased enforcement and collection by the ITA.

This NIS 8 billion is where the affair's affect might be felt, but nevertheless, tax officials expect any such affect to be minimal. For tax assessors, it's business as usual, they say. "Even if there is a 10 percent drop in our collection ability, that means that we will lose a billion shekels," said a senior ITA official.