Israel's high taxation is not only a heavy financial burden on businesses, but bureaucratic tinkering with everything related to tax payments has become illogical for many.
Yaron Gindi, president of the Israel Tax Advisers Association, was a guest on "Added Value," the economic podcast of Israel Hayom, and discussed the challenges of Shai Aharonovitch, the new head of the Tax Authority, as well as reforms along the way that are supposed to ease the bureaucracy somewhat.
Yaron Gindi,
Gindi, a second-generation tax consultant, says that the authority must first and foremost deal with human capital and empower it. "I think the Tax Authority is in the biggest manpower crisis in its history. The public loses out because it doesn't receive service, and collection suffers from it too. My father was an inspector in the Tax Authority for 25 years. I remember myself as a child, it was a great honor, like I was walking down the street with Messi. We need to restore respect for working in the Tax Authority, restore their pride in the unit and reward them accordingly."
Fatal harm to people
Gindi raised another burning issue in his view - the phenomenon of foreclosures, which has become quite common. "The issue of foreclosures at the Tax Authority and this is a scandal. This situation cannot continue. It's just public harassment. There are more than 700,<> foreclosures a year in all tax systems. It produces neither deterrence nor enforcement. It just creates false preoccupation on the part of the Tax Authority with all kinds of situations that they shouldn't be dealing with."
Shai Aharonovitch and the Tax Authority offices, photo: Avichai Shohar and Yehoshua Yosef
Gindi adds, "Take, for example, a citizen who receives a fine of NIS 3,000 for being late in submitting a report in good faith due to a technical problem. He does not know that he received the fine because until he receives the mail takes time, as a result of which his bank account and car are digested. It's a fatal blow.
"What's more, after that the fine is cancelled because it was imposed illegally. When a person feels that the system is screwing him, he will screw the system back. That's not how you create a trust system with normal ordinary citizens. Moreover, instead of dealing with black capital and tax evaders, they deal with citizens who are neither criminals nor tax evaders. A large part of the foreclosures are foreclosures of small sums that could have been prevented."
We know that there is a significant decline in tax collection by the state. How can they be increased?
"First, we need to bring more manpower to the Tax Authority; second, increasing trust will increase collection; The third thing is technology – the Tax Authority must undergo a technological revolution both in providing better service to the customer and in the war against black capital. The Tax Authority needs its own 8200. The Tax Authority's inspectors, who examine maybe 2% of the files, don't even have the tools to do an analysis."
The Authority will be ready
On the micro-business reform that will allow businesses with turnover of no more than NIS 120,30 per year to be exempt from submitting a full annual report and to be entitled to a 1% deduction of expenses without presenting accountants, Gindi says that to the best of his knowledge, the authority will be prepared to implement the reform as of January <>.
Small Business Law. Will it ease bureaucracy?, Photo: Envato Elements
Regarding the second reform that will come into effect in the coming year, the Israel invoice, Gindi says that most of the programming in Israel is prepared for this reform. The reform, we will recall, will work like this: when executing any transaction over NIS 25,70, it is necessary to transmit the transaction to the Tax Authority in order to receive a transaction code that indicates that the invoice is correct. The goal of the reform is to stop manual typing of invoices, "Today when I do bookkeeping for a large restaurant, it takes me <> hours of work, instead a bookkeeper will be able to pull all the invoices from the Tax Authority website in a minute.
And the main goal, of course, is to combat black capital and fictitious invoices. I also look at the fact that in the near future we will say goodbye to unnecessary typing and bookkeepers will engage in the professional work.
To listen to the full episode, search for "added value" on Google, Spotify or wherever you like to listen to your podcasts
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