‘Shortsighted’ Treasury bids to tax foreign reporters

Nahman Shai warns that foreign press corps could devoid tax by making Ramallah its base instead of Jerusalem.

November 26, 2010 05:44
foreign press

foreign press 248. (photo credit: Ariel Jerozolimski)


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In a move that some MKs warn could irreparably tarnish Israel’s international image, the Treasury is seeking to rescind foreign reporters’ tax exemptions via the economics arrangements bill that is now under review in the Knesset.

“From a governmental perspective, Israel – which needs the press – is telling them, ‘We don’t need you people here anymore,” MK Nahman Shai (Kadima) said on Thursday.

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Shai warned Treasury officials and lawmakers alike that the foreign press corps could decide to avoid the tax issue by making the 30- minute move from Jerusalem to Ramallah.

“If we push them, they could continue to cover Israel, but using the Palestinian Authority as their home base,” said Shai, who has a long history of working with both domestic and foreign media.

“This is a country with a special talent for harming itself – we are great experts at that,” he said.

“There are reporters here who are not enemies of Israel, even if they are critical, and instead of drawing them closer, we are hurting them,” he went on. “Even if they don’t like us and we don’t like them, this does not help.”

The original draft of the economic arrangements bill sought to cancel the partial income tax breaks offered both to foreign journalists living in Israel and to foreign athletes playing for Israel’s professional soccer and basketball teams.

While the athletes earn much more than the journalists, they also have powerful support among domestic heavy-hitters, including the professional sports leagues.

As a result of pressure, according to a source, the Treasury removed the clause in the bill that would have eliminated tax breaks for athletes. But the clause targeting the foreign press corps remained.

According to one source, the Tax Authority did not discuss the possibility that journalists would leave the country, or that it could hurt public diplomacy efforts, when it held discussions on removing the tax breaks.

The Knesset’s Research and Information Center has estimated that state revenue from rescinding the journalists’ tax breaks would amount to a few hundred thousand shekels each year. According to a 1996 amendment to the Income Tax Law, foreign journalists are entitled to a 25-percent discount on their income tax payments if they have been stationed in Israel for less than three years. Over a third – 23 members – of the foreign press corps currently qualify.

The Tax Authority acknowledged on Thursday that “the clause is not fiscal, but rather a matter of equality.

“These are not people who come here for short periods, but people who live here and enjoy the benefits provided by Israeli taxpayers, such as infrastructure, and so it is only right that they pay full taxes,” the Tax Authority said.

It added that it had supported fully taxing athletes as well.

The Knesset Finance Committee, which must approve the bill before it heads to the plenum for a final reading, discussed the issue of the journalists’ tax breaks last week. None of the committee members spoke in support of rescinding them. Still, budgetary votes are frequently approved along coalition-opposition lines, and Finance Committee officials could not say whether the clause would eventually be passed in the coming months.

The Treasury could also decide to remove the clause before the committee passes the arrangements bill.

Earlier this week, the Foreign Press Association sent a missive to MKs, warning that “many countries in the region, including Egypt, Lebanon and Jordan, have been seeking to attract the international press by zero tax-rating journalists, building very cheap and well-resourced media centers, and offering transparent and quick press accreditation procedures.”

The FPA added that “Israel is the most expensive place to live in the Middle East – it is more expensive than London. In the past the foreign journalists based here have been able to fend off their company accountant’s desire for us to move somewhere cheaper because of the small tax concessions we are granted.

“Any change at this point will tip that balance,” the association warned.

“Being in another country will not stop the foreign media writing about Israel, but it will limit Israel’s capacity to influence what is written and our capacity to listen properly to what it has to say,” it concluded.

Together with former journalist MK Shelly Yacimovich (Labor), Shai wrote a letter to Finance Minister Yuval Steinitz on Wednesday asking him to reconsider revoking the tax exemptions. In addition to the cost in negative publicity, Shai and Yacimovich argued that there was a cost to the economy in reducing the foreign reporters’ disposable income and perhaps even driving them across the Green Line.

“Every foreign writer is the source of income for a number of Israelis – they have translators, drivers, eat in restaurants, contribute money to our economy,” Shai said. “That has a great value, and thus, from a proper financial aspect, revoking the tax credit is a mistake.”

He told The Jerusalem Post that he feared the loss of the tax breaks could mean that longtime foreign correspondents would be replaced with temporary ones.

“Foreign correspondents are valuable in that they serve here for long periods and thus have an opportunity to learn deeply the issues facing Israel,” Shai explained.

“We always complain that the press has a superficial view, but they really do tend to build relationships here and learn many dimensions of the complex situations here. In contrast, temporary or visiting reporters have no commitments to anyone,” he said.

Shai, 63, has served as press secretary for Israel’s United Nations delegation, press consultant to the embassy in Washington, founder and CEO of the Second Authority for Television and Radio, chairman of the board of directors of the Israel Television News Company, chairman of the Israel Broadcasting Authority, and IDF spokesman.

The tax exemption is also likely to be raised during Tuesday’s meeting of the Knesset Immigration, Absorption and Public Diplomacy Committee, which is scheduled to discuss issues facing Israel-based foreign journalists and presenting Israel’s case in the foreign media.

Committee chairman Danny Danon (Likud) said, “As someone who deals with public diplomacy issues on a daily basis, I am aware of the importance of working and cultivating the relationship with foreign journalists who are in Israel. This bad decision has no budgetary benefit, but it sends a message to the reporters that we do not value their presence in Israel.”

According to Danon, “if this decision convinces even one reporter to move away from Jerusalem to the Palestinian Authority, it will be a waste for our public diplomacy efforts. As of today, some reporters spend too much time already in the lobby of the American Colony [hotel in east Jerusalem] rather than meeting with Israeli decision- makers.”

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