Call to Order / How Much Does the State Earn From Trafficking in Women?

The Israel Tax Authority has assessed that brothels owe NIS 18 million in taxes from recent years. This sum pertains to 46 brothels. That is, around NIS 400,000 per brothel on average. No, it isn't that some income tax official thinks there are only 46 escort services in Israel. But in order to assess the tax on each escort service, the authority must join the police to carry out a widespread raid on them. In 2004, two such operations took place and 77 escort girls were arrested. In 2005, only one escort service was checked and since then, there have been no raids.

At a meeting of the Knesset Subcommittee on Trafficking in Women last Wednesday, Tax Authority officials explained they were dependent on police operations.

The truth is that it is also not entirely clear how many massage parlors and escort services were inspected in 2004. At the meeting, Tax Authority officials reported they had conducted 46 raids (as part of two operations); the report they submitted refers to 45 raids and the comments on the report cite 51 raids.

In any case, the chairwoman of the Knesset subcommittee, Zahava Gal-On, yesterday voiced her frustration over the amount of taxes assessed for massage parlors and the extent of its collection. A report by the Hotline for Migrant Workers estimates the profit that a trafficker makes from one woman at NIS 540,000 per year, based on a calculation of NIS 150 charged per client, 10 clients a day, 365 days a year. Gal-On mentioned that the former income tax commissioner, Tali Yaron-Eldar, had estimated in 2004 that trafficking in women brought in an annual turnover of NIS 1 billion.

But the truth is that even if the Tax Authority were to assess taxes on the hundreds of massage parlors (totaling hundreds of millions of shekels), it would probably hardly see any money from it. Of the NIS 18 million assessed, the Tax Authority managed to collect less than half a million shekels (including VAT). The deputy director general of Tax Authority investigations, Doron Arbeli, explained there was no one from whom to collect taxes: "The crime organizations position people who have no income or assets, and no financial capability, at the forefront of the massage parlors. These people earn hundreds of dollars a month, and there is nothing to confiscate or foreclose on."

Did you expel and also inherit?

The Hotline for Migrant Workers submitted a report to the committee entitled "Did you expel and also inherit?" that describes the considerable profit the State of Israel makes from trafficking in women in particular and human trafficking in general. Unlike the state, which feels that taxing a business run by organized crime is an excellent way to fight them, the hotline sees taxing massage parlors and escort services as a way of legitimizing them. If the state is already profiting from trafficking in women, argues the hotline's legal adviser, Naomi Levenkorn, who prepared the report, then it should make sure the victims of the trafficking, and not the state, benefit from the proceeds.

Most tax benefits from the sex industry, the report claims, come not from the massage parlors themselves but from indirect income. It comes from the taxes paid by taxi drivers who take the women to their clients, from the apartment owners who rent their apartments to escort services and brothels, from attorneys who represented traffickers in women, newspapers that run ads for sexual services and others. This money, Levenkorn notes, stems from the fees paid for sexual services, but in the end reaches the state's coffers.

Local authorities, it turns out, make a pretty penny from municipal taxes on massage parlors. The moment a municipality discovers that an apartment is being used as a brothel and not for residential services, it starts charging a higher rate for commercial enterprises. An official in the Haifa Municipality explained to officials from the Hotline for Migrant Workers: "We are interested in the municipal taxes. Legal, illegal, that is something for the police to deal with." Over the last seven years, the Tel Aviv Municipality collected more than NIS 50,000 in municipal taxes from a Tel Aviv apartment where a brothel operated and where women were held forcibly and even trafficked. According to the Hotline for Migrant Workers' report, the number of brothels operating in Tel Aviv is estimated at over 100. It is possible to estimate that they bring in around NIS 1 million annually for the city.

No indictments

The trafficked women have a hard time demanding compensation from the traffickers because they cannot remain in Israel and they fear for their lives. Even if a judge rules they are entitled to compensation, usually they do not manage to collect it. In many cases, Levenkorn relates, the only option available to these women is to compromise on the miserable sum of $1,000-2,000. Tali Eisenberg, of the Woman to Woman feminist center, noted that when the courts ruled in favor of compensation for trafficked women, it was usually after they had been deported back to their country and they could not actually receive the money.

The state actually does profit, because traffickers who have been convicted are fined. In 2004, the fines totaled NIS 216,000 and in 2006, NIS 260,000. The state coffer also benefits when traffickers are released on bail and disappear. Then the state forecloses on the bail and impounds funds found in the hands of criminals. In the Livshitz ruling for example, the state collected around NIS 91,000, $2,600 and 700 euros from trafficking in women, but the victim of the trafficking received only NIS 30,000 in compensation, or around 20 percent of the sum confiscated.

At the committee meeting, at least a few other problematic facts were disclosed: The law banning trafficking in humans enacted in October 2006 requires the establishment of a fund to combat trafficking in humans, and rehabilitation for its victims. This fund could have been used to assist the victims of trafficking in women, but it turns out that no one is rushing to set up the fund or to enact regulations that would facilitate its establishment.

So far no indictment has been issued under the law to combat trafficking in humans. This law expands the crime of trafficking in humans to include employing foreign workers in slave-like conditions. Gal-On announced she would approach the heads of the Police Investigation Unit with a request to give this issue priority.

The enforcement agencies are very proud of the establishment of the integrated hotline to combat crime organizations. But this hotline has yet to set up a task force to combat trafficking in women.