Tax hike on foreign journalists is counterproductive

The move could force people who are not in the 46% tax bracket to pay taxes in their home country.

By
April 27, 2009 09:57
3 minute read.
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Reactions were mixed following reports on Sunday that the Finance Ministry was considering raising income tax for foreign correspondents to 46 percent. "We haven't been officially notified," said Foreign Press Association executive secretary Glenys Sugarman, explaining why the matter would not be on the agenda at the day's annual General Meeting of the FPA in Jerusalem. Nonetheless someone is bound to bring it up, judging from the conversation that The Jerusalem Post had with Conny Mus, a past chairman of the FPA who had just come back from abroad and had already received several phone calls on the subject from concerned colleagues. Mus, who works for television stations in the Netherlands and Belgium, noted that foreign journalists pay taxes either in Israel or in his or her home country, depending on which has the lower rate, provided their home country has a prevention of double taxation agreement with Israel. "In principle, every country has its own rules, and every foreign news organization follows the rules of the countries in which its correspondents are based," he said. Forcing people who are not in the 46% tax bracket to pay higher taxes could easily backfire, Mus said, because many would choose to pay tax in their home country, and some news organizations would transfer their bureaus to Amman or Beirut. It may also be less costly to operate out of the Jordanian or Lebanese capitals, and if it becomes too expensive for journalists to work in Israel, these two options are always available. "It's not an easy issue," Mus said. In his view the tax hike would be counterproductive because in the long run it would not bring any extra dollars to the state. "Every news organization is facing budget cuts," and Israel, by increasing income tax and other costs, could force many foreign correspondents to base themselves in other parts of the region, he said. Germany has a treaty with Israel for the prevention of double taxation, so Inge Gunther will be unaffected. She writes for several German publications and pays income tax in Germany, but is not exempt from other Israeli taxes, because she is in Israel on a work visa. Current FPA chairman Steve Gutkin was reluctant to comment until there was something definite. "Taxes are an extremely sensitive issue," he said. Swiss journalist George Szpiro, who is an economist by training, said he would probably get into trouble with his colleagues for saying that he didn't see why foreign journalists shouldn't be taxed like Israelis. In fact, as far as he was aware, they were taxed like Israelis, except in their first three years here, when they received certain exemptions. "It may sound like something new, but it's just for show," he said. Even the 46%, he said, did not apply to the whole salary. "If someone earns NIS 50,000, he pays 46% only on the last NIS 20,000." Doing a quick calculation as he spoke, Szpiro reached the conclusion that "taxing foreign correspondents more, will not bring in much money." Simon McGregor-Wood, the bureau chief for ABC News and immediate past chairman of the FPA, was fairly fatalistic. "We'll take whatever comes. Whatever happens, happens," he said, making clear that he would offer no further comment until he had spoken to other members of the foreign press community. Israel has one of the world's largest concentrations of foreign correspondents, with an FPA membership in excess of 400. There are also many foreign correspondents who are not members of the FPA. A large number of foreign correspondents are dual nationals and as such, pay Israeli income tax in any event. If these are subtracted from the total number of foreign correspondents, the Treasury seems likely to gain very little revenue by imposing higher income tax on foreign correspondents.

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