'Tax Authority doesn't use tools to chase debtors'

State Comptroller's report criticizes Finance Ministry, urges Tax Authority to improve tender process, slams Housing Authority's accounting for state assets.

May 17, 2011 16:38
2 minute read.
State Comptroller Micha Lindenstrauss.

Micha Lindenstrauss 311. (photo credit: Ariel Jerozolimski )

The Israel Tax Authority does not use all the tools at its disposal to enforce debt collection and in some cases even shies away from doing its job through fear of violence from tax evaders, State Comptroller Micha Lindenstrauss said in his annual report which he tabled to the Knesset on Tuesday.

The Finance Ministry received heavy criticism in the 61st annual report, particularly over the Tax Authority’s performance and the failure of its Accountant General to properly list state assets in financial reports.

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Recalling that an estimated NIS 51.1 billion in taxes remained uncollected at the end of 2009, Lindenstrauss wrote: “It is up to the Tax Authority to examine its [collection] process and to make it more efficient, while utilizing the tools at its disposal in order to collect debts by their appointed time.

“It is the authority’s responsibility to instruct its regional offices to focus on using the legal powers invested in them to collect debts where there is a high chance of collecting, to check why there have not been seizures of the personal belongings of debtors that have received warnings over the matter, and to correct the faults found in regard to the seizure of third-party properties.”

The section on the collection of taxes from the non-profit sector appeared to be less damning, although the report did emphasize that the authority must be stricter in defining what constitutes a non-profit organization. After noting that the non-profit sector has grown rapidly in recent decades, the comptroller wrote that tax collection from the sector had been pushed to the bottom of the Tax Authority’s priorities due to internal faults from within the authority.

Lindenstrauss wrote, “The taxation authorities must do their part for the control and supervision of the third [non-profit] sector, in order to prevent the possibility of abuse of the tax exemptions and relief given to the sector.”

The report also called on the Tax Authority to improve its tender process, and listed faults such as the repeated appointments of the same individuals to the authority’s examination committee, the lack of correlation between candidates’ scores and their positions within the authority’s hierarchy, and the fact that an academic degree was not required of many individuals in management positions.

Aside from the Tax Authority, the Housing Authority - which is subordinate to the Finance Ministry’s Accountant General - also came under fire for its lack of “full and proper accounting” for state assets. Lindenstrauss wrote that the data listed in the Housing Authority’s financial report were not updated and therefore were also listed wrongly in government financial reports.

“Proper accounting is of the utmost importance,” he said. “Not properly listing permanent property causes a fundamental distortion in the presentation of expense figures in financial performance reports…and presents an incorrect picture of state assets to the public and to decision-makers.”

The Comptroller’s office said prior to releasing the report that it had placed an emphasis on following up shortcomings that it had raised in previous years. This was evident in its complaint about the listing of state assets, which the comptroller said had first been brought to attention of the Accountant General’s office last decade.

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