Tax evasion, extortion by ‘mystic’ rabbis and kashrut authorities examined by Knesset committee

State Comptroller’s Office rep says some of the so-called kabbalists have accumulated wealth of hundreds of millions of shekels but for some reason had not been taxed until now.

July 13, 2015 19:11
3 minute read.

Shekel money bills. (photo credit: REUTERS)

“Mystic” rabbis whose payment for spiritual advice is untaxed, allegations of local rabbinate coercion and independent kashrut supervision authorities that pay no tax were examined at a hearing of the Knesset State Control Committee on Monday.

The hearing was initiated by Knesset State Control Committee chairwoman MK Karin Elharar (Yesh Atid) in light of findings by a State Comptroller’s report on some of these issues, and was strongly promoted by the Ne’emanei Torah Ve’Avodah national-religious lobbying group.

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Elharar said during the hearing that it was vital that the law dealt with rabbis and religious institutions in the same manner as it would any other profit-making individual or entity.

The director of the Tax Authority said the organization would shortly issue regulations to tax rabbis who proffer advice in return for payment. Independent kashrut authorities, many of which are registered as non-profit organizations and receive tax breaks, will also be regulated.

Tzvi Vartikovsky, a representative of the State Comptroller’s Office, said that some kabbalists have accumulated hundreds of millions of shekels that have not been taxed until now.

“Some of the courts of the mystic rabbis deal with tens of millions of shekels and many of them refute the obligation to pay [taxes],” said Elharar, who added that the current distinction between a gift and monetary remuneration leaves too much room to the taxpayer’s own consideration of the nature of the payment.

Tax Authority director Moshe Asher said that matters regarding rabbinic advisory services would be clearer and simpler if a law were passed stipulating that any gift not between family members would be subject to tax.

The authority had begun bringing the courts of rabbis who provide such services for financial remuneration into the tax system, and some 44 independent kashrut authorities had been identified as required to pay tax in 2014, he added.

Vartikovsky also noted that many independent kashrut supervision authorities have escaped the tax authorities’ radar and do not pay tax despite earning millions of shekels in revenue.

Although only local rabbinates and regional branches of the Chief Rabbinate can issue a kashrut license, many restaurants that cater to a more stringently religious – often haredi (ultra-Orthodox) – clientele will adopt supervision from independent kashrut authorities that provide their services for a monthly fee.

Present at the hearing was business owner Roni Hamema of Hamema Snacks, who said that he had been directly affected by the lack of oversight in the field of haredi kashrut supervision authorities.

Hamema said that there was a “direct connection” between some municipal chief rabbis and particular kashrut supervision authorities.

In some instances, he added, business owners under the jurisdiction of municipal chief rabbis are forced to take on specific independent kashrut supervision authorities.

“Unless you acquire a certificate of a certain Badatz [kashrut supervision], the rabbinate in that city will not give you a certificate,” Hamema said.

No food item in Israel can be labeled as kosher unless it is approved as kosher by the Chief Rabbinate or a local rabbinate, while additional certificates from independent kashrut supervision authorities can be adopted.

A representative of Ne’emanei Torah Ve’Avodah concurred with Hamema, asserting that numerous local rabbinates obligate businesses to use specific kashrut authorities and that the issue required legislation to resolve these problems and create greater transparency within such authorities.

Hamema noted that he has certification for many of his products from different haredi kashrut supervision authorities. He said that this was because – at the urging of their leadership – haredi consumers from different groups insist on eating products only from the kashrut supervision authority specific to their particular affiliation.

He called the practice into question, since at one of his factories only one supervisor conducts the kashrut supervision for six independent kashrut supervision authorities, yet he has to pay each authority separately.

During the committee’s deliberations, Religious Services Minister David Azoulay (Shas) insisted that the ministry was not connected with independent kashrut authorities and was not responsible for how they are run.

He expressed support, however, for ending the practice of businesses directly paying a supervisor working for the local rabbinate for his services, an issue that has frequently been criticized as a clear conflict of interests.

Deputy Defense Minister Eli Ben-Dahan (Bayit Yehudi), who served as deputy religious services minister in the last government, initiated a reform to make kashrut supervisors directly subject to the local rabbinate they work for. The initiative, however, only got as far as a pilot scheme and was not rolled out nationally.

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