How to Make More Money by Paying More Taxes

This may be a first. Companies in Israel have been making money by paying too much tax.

I’ll pause while you take that in.

In essence, after a reduction in the tax rate, companies did not reduce their tax payments. Whether this was done deliberately or otherwise is not certain. However, when it came time to reconcile payments, these companies were due a refund. And here’s the kicker. The refunds attracted interest at 4%, a rate higher than the companies could have received had they paid the money into a bank… In short, the tax man became a kind of bank!

The worst effect is that because of this somewhat strange set of circumstances, the budget predictions are off, and the state is looking at a deep deficit. Oh dear.

Check out the report in Globes, here.

Only in Israel?

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Israel’s other challenges

Other, as in other than security, and peace. This from Globes:

The Finance Ministry’s tax revenues report shows 52.3% of Israelis earning below the monthly income tax threshold of NIS 4,905.

The Ministry of Finance’s latest tax revenues report shows 52.3% of Israelis failing to earn above the income tax threshold of NIS 4,905 per month. In all 54.5% of salaried employees fail to reach NIS 4,905 per month and 33.8% of the self-employed. The report also found that the highest 20% of earners paid 80% of Israel’s direct taxes.

That’s one point of reference. Israel has its issues.

But look at this for shocking statistics about the spread among the cities:

The report also reflected the growing regional inequalities in Israel. Tel Aviv residents are responsible for 27% of all the income tax paid in Israel, Haifa residents 12.2% and Jerusalem with double the number of residents as Tel Aviv is responsible for only 6.8% of income tax paid.

Either Jerusalem has an amazing collection of tax dodgers, or an awful morass of poverty. It’s the latter. Israel has its issues.

And how about this for inequality:

The report also reflects gender inequalities. In 2012, the average gross income of an Israeli man was 63% higher than the average gross income of a woman.

As an aside, I have been told that although there are laws that prevent discrimination, they are routinely breached. For example, at job interviews, women are asked questions (about starting a family, for example) that are illegal. And if the candidate does not answer, or objects, what chance do you think they have of getting the job? Israel has its issues.

As for the importance of petrol, the following might make you believe the government was happy Better Place’s electric car revolution failed:

The report also shows fuel tax revenues tripling between 2000 and 2014 while fuel prices rose just 50%. The report shows that in 2014 alone the Israeli government raked in over NIS 27 billion from tax on gasoline, diesel, cars and vehicle parts.

However strong the economy is, it’s not something that benefits all of society; or at least not sufficiently. Israel has its issues.

We have our challenges, and we need to face them, and tackle them.

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Tax Return Returned

This is especially for those of you struggling to get your UK Tax returns in before the end of January deadline:

He's got a point

He’s got a point

That is what you call a cracker!

[Many thanks to Michael H for this.]

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