💰 עסק או ביש - פרק 12: מנהל רשות המסים מדבר על הכול: סעיף 46, חרדים, נדל"ן ומיסים

The business world is one big jungle. In it, there are two possibilities. Either you are sitting at the table, or you are part of the menu. Business-Ish, between promises and reality behind the scenes of the real estate world. Hosted by Yossi Palai. Hello and welcome, we are at episode 12 of Business-Ish, with us is an important guest today, Head of the Tax Authority, Attorney Shay Aharonovich, hello Shay, how are things ? Hello, good morning, and thank you for the invitation. Thank you for coming. Well, you are the man of the hour today, whether you like it or not, and we will touch on several topics today: both the issue of real estate taxation and other matters you deal with as head of the authority. But let's start with the topic on the agenda: the interface of the Haredi public today with the Tax Authority, regarding everything related to Section 46 and the matter of those liable for conscription or those defined as draft evaders. That in fact today, by order of the High Court and the Attorney General’s instruction, they are not eligible for Section 46; meaning it is very difficult for them today to raise funds. In other words, what is your position as the Tax Authority? And let's soon move to the practical side: how are they supposed to act in this matter? Well, look, first of all, I want to tell you that from the aspect of one who lives the Tax Authority, which is the body, the arm of the state that collects taxes, and of course we are a department in the Ministry of Finance, etc., in the end, we want to be apolitical. Meaning, in general, ultimately we collect taxes for the entire State of Israel, and it doesn't matter if you are right-wing, left-wing , Haredi, secular, and so on. And, well , to tell you that I really love this topic, that we have to, as if, we have to be part of the matter right now. Once again, without a personal opinion regarding yes to conscription, no to conscription, Haredi conscription, etc. , that is less interesting. At the end of the day, I am a state official with my opinions and so on, but at the end of the day, we are legally guided by the Attorney General, and of course by what the High Court rules. In accordance with the Attorney General's guidance, part of what we call sanctions or the tightening that the High Court requested to do regarding the funding, directly or indirectly, of those who are liable for conscription, but let's call them those who are not cooperating with the Ministry of Defense and the IDF, was actually to freeze the ability to receive the tax credit under Section 46 for those organizations that support those who evade the draft. Now, this is not a simple thing; meaning, at the end of the day, this is not a simple task to check, we also cannot ultimately go organization by organization. We have 11,000 organizations today in the State of Israel that are eligible for Section 46, meaning across the board, of course also organizations that are connected to the Haredi public, but not only, and therefore it is work...it is a problem that, it is not something I can start to do proactively. What was ultimately decided is that we will actually send notices to the entities regarding which we have received indications that they are entities that provide support. Once again, they asked me, for instance, about food baskets for families in need ; it’s not...that’s not the point, it’s a bit complex to get into the practice—which associations are included, what are those used for some mixed purpose, is it related...ah, but I want to say, before we dive into the technical details. Look, the Haredi public feels—rightly or wrongly, it could be an objective or subjective feeling—that they are being persecuted. I want to play you what their representative, Knesset Member Moshe Gafni, says in the Finance Committee. I’ll play it for you, and you can respond. Look, I received a list regarding Section 46. Yes. They removed all the yeshivas from this list. All the Torah institutions were removed . Who gave them permission to do this? There is a law in the country. Who gave the Finance Minister and the Tax Authority Director permission? Who gave them the right to remove them? Let them come to the committee and say it's impossible to grant them [status], and let the committee remove them. By what authority do people with no jurisdiction simply go and remove the yeshivas? From where? Where was this taken from? All Torah institutions were taken out. The biggest trouble we have in the Torah world is with the knitted kippot. The Finance Minister and the Tax Authority Director. How did their hands not shake? Were you personally offended by the criticism? No, I want to say, first of all. I want to say that I deeply respect MK Rabbi Gafni. We have years of acquaintance, many years of acquaintance. I think there is appreciation—I have appreciation for him, I think there is mutual appreciation. I think one must also say a very good word for Rabbi Gafni regarding most of the term; I entered the position several months before October. That is to say, for most of my term, he was actually the Chairman of the Finance Committee, and one must come and say that he conducted himself very courageously to safeguard the economy of the State of Israel and really helped pass some of the legislation related to the tax world, like the trapped profits, Israeli accounts, and so on, which were not easy. He faced very difficult pressures and he understood the importance to the Israeli economy. And besides that, I think that we really have been working for years and know how to bridge the gaps here. Once again, I understand his anger. I will say it again: ultimately, we are a body of the state, of the government. We are guided by the Attorney General; we are actually instructed to act on the issue of Section 46 and try to, in fact, notify those associations that support those who are draft evaders that they will effectively not be able to continue receiving—that is, those donors— they will not be able to continue receiving the Section 46 benefit. I hope, of course—again, we will talk about what is happening right now— that a solution will be found in the future. One must also know another thing: it is not that someone who donates right now has any fear for their donation currently; if he contributes right now to an entity that holds Section 46—we haven't taken away Section 46 yet, okay? And that is exactly the question I wanted, I was also asked what I am supposed to ask you: what actually happens to a person who donated now relying on Section 46, and during the year you revoked it, you discovered that indeed in this institution there are those studying there who are subject to recruitment or have not regularized their status? After all, at the end of the tax year he is supposed to submit those [] to you, do you cancel it for him, or since it was valid when he received it, will he be credited? So I want to say, yes, like this: one, let's start with what is happening now and what is coming back. First, let's start with the fact that today we have an online system for receiving Section 46; meaning, whoever donates today must actually also provide his ID number, of course, to the institution he is donating to. The institution actually issues him the receipt that entitles the donor to Section 46, and it appears , it is transmitted immediately to the Tax Authority and appears on the Tax Authority's website. Meaning, seemingly , even if I downloaded today, on, I don't know, the 26th of August, I am actually downloading the approval for a certain non-profit–if you donated yesterday, seemingly, as long as you donated on August 25th, it already appears in the system and on that day the non-profit had an approval. Therefore, seemingly, it is possible. But right now let's talk about what is happening currently, and we have sent the letters, you will surely ask in a moment what that means. My estimate, meaning, is that we will not remove Section 46 before the end of '26; meaning, my estimate is that with the time we gave and with the hearing that is actually due to the non-profit on this matter. I believe that, meaning, the start of the removal for whoever, in fact, the revocation of Section 46 will only start from January 1st, '27. And therefore I say again, whoever is donating right now has nothing to fear. And I say one more thing, today our system is online and you can also check at any given moment by entering the Tax Authority's website and entering the non-profit's number. By the way, regardless of this issue now, to come and check if a certain non-profit has Section 46 you do, you write the number , the exact non-profit number, and you immediately get an indication whether the non-profit holds 46 or does not hold 46, and therefore, seemingly, it can be done during the year too, but right now it doesn't look like that according to the schedule is a problem. End of '26, let's say...I say, I will take you to '27, for the sake of the matter: January, February, March, the non-profit had 46, I donated during the month of February, and in the month, in the month of April you cancelled it. So what I donated in February, it's clear that you accept it, you accept it. Certainly, certainly, now let's look for a moment at the practical level, what today a head of an institution, a head of a yeshiva, a manager of a non-profit, who now effectively also needs to understand who this applies to , yeshiva students, a non-profit that is an educational institution that gives scholarships, gives grants, how do we process this and how should he act today? At this moment, that is to say, preparing for the end of '26. We, according to our understanding of the advisor's guidance and the directives we received, are broadly talking about institutions that provide support, let's call it on a daily basis , through scholarships or, of course, yeshivas where the students who study there are actually draft evaders. And therefore, that is to say, they are whom we are targeting. I was asked, for example, about non-profits that distribute food baskets; we are—we are not aiming at that. I do not expect a non-profit that hands out food baskets to check if a specific family receiving the basket, say before Rosh Hashanah, has someone in it who is draft-eligible and is currently an evader; that is not the intention. Supposedly that's not the intention. Not "supposedly," why not? I am asking, like, it's... Ah, because once again, we are talking about... In the study of a Torah scholar, there is a Talmudic concept of "Hefetz" or " Gavra," the question is whether you look at the person or the institution. If the person is draft-eligible, then what does it matter how I give him the money? Yes, but we also want to be practical. I cannot now go to—there are charity ventures, wedding assistance, giving food—if he is draft-eligible, that's not what we're talking about. We are mainly talking about yeshivas where students study, an educational institution. Draft evaders. Now, it could be...we sent out a few days ago, we actually issued 1,000 letters. Again , we received lists of non-profits from the Ministry of Education and other sources, we cross-referenced, and we sent [letters] to these thousand-something non-profits. It is possible that among them are some that, in the end, turn out not to be yeshivas or kollels where people study, but are, as we said, charity ventures, and so on . What I suggest is, uh, they will receive the letter; we have actually given them time to respond to the letter via an online system until, uh, until the ninth of the month, by calculation, God willing. Meaning we said we won't bother them during the " Elul" period. That is to say, there is time until after the holidays to actually fill out the form. In the form , actually, uh, the non-profit directors need to declare if they have —and again, the intention is mainly, as I say, the intention is mainly for those who have students who are, indeed —that they are, in fact, uh, they are ...Draft-eligible individuals who are not cooperating; that is to say, they are not exempt and not...but simply have not stepped forward to settle their status. Exactly, they are also required to attach their list of students. That is to say, we will of course receive—the goal is to receive the lists, of course perform the cross-referencing against the lists we receive from the Ministry of Defense, and then in fact, if there are indeed students there who have not settled their status as you said, then we will inform that institution that Section 46 will be revoked. Starting when? Am I entitled to any hearing, or do you cancel immediately? No, so I will inform—the goal is, of course, legally I need to notify that I am going to revoke. And as I said, the likely target date will be December 31st or January 1st, 2027, and as for the hearing, usually it's a written hearing; in a case like this, there might also be an oral hearing. Again, I don't know yet, we aren't there yet, but generally the right to a hearing exists—whether in writing or orally. By the way, I'm often asked now what will happen if we don't cooperate; so if we don't cooperate, we wrote there in the letter , meaning, non-cooperation will ultimately lead, in fact, to the revocation of the approval. Meaning, therefore, I do suggest starting the process. That is to say, some of the leaders of the Haredi community and Knesset members from the Haredi parties have also approached me. I told them to cooperate. Meaning, don't break the rules; not cooperating will likely lead to less favorable results. This is where we are currently operating; we are also being accompanied by the Attorney General's staff. And we will, so to speak, see how we actually move forward with this matter. Okay. What happens with an institution? 500 students and 10 students haven't regularized their status because these are things that people, right? Understand, after all, in the end we won't have 100%. I understand an institution that is entirely uncooperative; we understood an institution that is cooperating. From here, I want to say: I suggest, for exactly that reason, to cooperate and register, and we will essentially see that there is a small amount, meaning that will be reported to us. And of course, we will see from the student list that there is a small number of those who haven't regularized their status. Once we actually collect the data, with that, we will receive legal advice on what we are doing. It could very well be that in a place where it is negligible—again, I can't say because ultimately it won't be mine, but—in a place where it is truly negligible, it is very possible that they might settle for some kind of warning and currently leave it, because again, things also need to be reasonable. Meaning, I mean, 10 out of 500—it's not certain that this is the place that needs an arrangement. For the whole institution, two percent, essentially. But again, I say: we will examine this. The legal advisor said: when the data arrives, we will actually give to this, actually these things will be given answers. I also know that there are also High Court proceedings that have started, which are intended to be filed regarding this matter. I say again: we will see in the coming weeks. What I do suggest is—I think the most correct thing is to cooperate. Again, non-cooperation will likely lead to revocation almost automatically, so it's a shame. Yes, another thing regarding what we discussed about non-profits—what happens with non-profits that serve as a conduit? Meaning, an organization that is actually a charity and welfare organization, and this organization transferred funds to yeshivas—is it also seemingly under the same risk of losing Section 46 status, even if it itself is not an educational institution or not? What I suggest, once again, is that if such an organization received a notice from us—meaning, by the way, an organization that didn't receive a notice from us is, for all intents and purposes, fine. Anyone who didn't receive a notice from your side? Anyone who didn't receive a notice right now—meaning, we sent them out in a targeted manner. Ah, that organization, one that I think is what you call a conduit. It doesn't ...I mean, it transfers funds to organizations and doesn't know what's happening inside those organizations. Please have them submit a response letter to us, justify it, and state that. And we...we don't have a final decision yet, but I appreci—we don't have a decision on this yet, but we will sit down again with the legal advisor and so on, and we will make decisions, again, what you might call reasonable ones. It is not our goal here to now strip the Haredi public of Section 46 status across the board; that needs to be known. There is simply the incident of...those who are not cooperating, as you said, the ones who aren't transparent and so on—an issue that needs to be dealt with. We are trying to deal with it as much as possible, as much as we can, with precision, as I said. And therefore, again, organizations that think there is actually no reason to revoke—I understand the anger and perhaps there is the instinct of...You read about it —I don't want it to be seen, heaven forbid, as persecution. Maybe we'll talk soon about the relationship between the Tax Authority and the Haredi public; I don't want it to be seen as persecution, heaven forbid. I will say it again, we need to understand, there is...we are in a legal situation. At the end of the day, there is a legal system in the State of Israel. The High Court has spoken. Let's try, as they say, to do this as much as possible in a way—again, to handle this in a way that we really only address the organizations that actually have problems. For those that don't, we say: You are also important. In the event that we hear, we will reach a hearing, and it is possible that we will decide on a correction... nothing special. We are...certainly, certainly, that is the goal. That is also why we gave time. It must be said, the advisor also said: Let's give it time. We gave time, we also didn't want to do it during the holidays. We said: Okay, let's give, what you might call, time; let's give a service period until the...until after, God willing. So let's open up the topic of the relationship between the Tax Authority and the Haredi public in general, from years ago. The Haredi public feels something very apprehensive, some kind of distance. In general, most citizens of Israel don't feel very comfortable facing the Tax Authority, so the Haredi public, in the face of authorities in general, is apprehensive—all the more so with the Tax Authority. It was truly a very extreme, very unusual incident in Bnei Brak: Did you get there for property tax, or for some collection, bookkeeping, you came for bookkeeping. Well, we have known this phenomenon for years, from Mea Shearim, from the more intense places, and then in Bnei Brak, there was a riot and they attacked there and fled, and you announced that you are not going in anymore. Yes, but okay, afterwards. And in the end, did you reach some... Yes, and I must say that we are operating now, we are doing...not what happened, just, uh, in... Within two weeks, our employees arrived —these are bookkeeping employees, bookkeeping employees are the unit that essentially comes and checks if a store or business is recording receipts properly, etc., yes, yes, if they are ringing it up at the register, in slang . By the way, no one likes it when someone comes to audit them and so on. And really, you are right, that we have indeed known of such phenomena, let’s say the hardcore ones, from Mea Shearim let's call it, really places where we knew in advance that we need to come with police, and there, no—they don't come—that’s in Bnei Brak. It must be said that our operations over the years...I don’t remember, I mean, there are always legends about them whistling on Rabbi Akiva Street and all these things, but again—not with violent phenomena. And here it happened that within a week there were two cases of literal, severe violent assault, let's call it real, with a fear of physical harm, damage to our vehicles, and so on, and we treated it very seriously. The police arrived, of course, dispersed it and everything, and I truly announced that it is impossible, I mean, and precisely because of the good relationship that exists with Bnei Brak, which we saw, for example, during the time with the Iron Dome—(where unfortunately houses and businesses in Bnei Brak were damaged and we really operated there) —so I came and said: If you don’t —in this way—don't actually respect the...again, I don't expect them to love that we come to do tax audits, but of course—not with violence, so we also won't enter, as they say. To the subject of, uh, handling the Compensation Fund. I should say that within, uh, already within two days we had, uh, there was a meeting with the Mayor of Bnei Brak, and also again, the Haredi Members of Knesset, here too I had...[successful meetings] with them. In the end, we reached what you might call, ultimately, yes, that we—we simply asked that the municipality come and say: I don't expect the mayor to be able to control exactly this, but to come and make a statement: "In our place, such a thing will not be tolerated in our territory." It should be said that since then, the Tax Authority enters, uh, of course we coordinate also with the police and so on. It is clear that the current situation...come, how do you say, we are in a kind of state of affairs right now, and that is clear, and we are not ignoring it, and things need to be done with common sense. In general, the relationship with the Haredi public—I want to say that firstly, as you said, I have discovered (and I have been at the Tax Authority for 25 years) that no public likes to pay taxes. People don't like, they don't like paying taxes, you know, I'm saying it's from high-tech to the Carmel Market. I mean, it's not... people don't come and love paying taxes , although I must say that people, people, I think especially in times like we have unfortunately been in these past few years, people also understand the importance of paying tax , because they realize that this is ultimately what gives the government the ability to defend, protect, provide services, and so on. First, I must say that with the Haredi public, first of all, quite a few employees from the Haredi public have entered in recent years, putting a lot of focus on their income. Therefore, first of all, we have had employees in the Tax Authority for quite a few years now, including an employee, including a deputy assessing officer, a strictly Haredi woman here in Jerusalem, I think, right in front of us at Kanfei Nesharim 66, who has really come a very long way. And we had employees in the past, by the way, in the 90s there was at least one deputy director general, one deputy commissioner who was Haredi, Alperin if I’m not mistaken is his name, again, I wasn't there then, but let’s say: the Haredi public is part of the State of Israel. It’s true that there is some apprehension, but I think we are trying to alleviate it. And I think more and more people understand today in general that it is harder to receive cash and regarding the issue of Israeli accounts, and so on. And we really see that more of the Haredi public, for example, small businesses in the Haredi sector are registering as micro-businesses, as exempt businesses. In other words, we see movement in this regard. Besides that, it is very important for us to integrate Haredi workers, and we really do have Haredi female employees. And you know how to provide them with a work environment. Two, there was a lot on this; we started, I must say, we started with a pilot in the Compensation Fund. We brought in a number of employees there; first of all , I have an employee there who was also my assistant for a certain period, she is also a Haredi woman who has had a very impressive career, a CPA, a certified lawyer. Danuchi, if I’m allowed to say her name, truly, a woman who also came from the Haredi public, and she has a department of Haredi women who are tax consultants in the Compensation Fund. And they handle, and the Compensation Fund, you have to know , handles hundreds of thousands of claims. Following our success there, we saw that it was successful—we brought in close to 10 young women there. So we initiated, together with various factors, because you can't go it alone here, with factors in the Haredi public , a course for female inspectors for accounting graduates from Haredi seminaries in Jerusalem, and they finished a few months ago and were integrated into work in Jerusalem. Right? You have to carry out these things and you have to understand, and I also tell our people that they need to understand this. I mean, just for example: there was a question A, and I must say they didn't involve me—only afterward did they say that, for instance, they found a way to make the topic of Memorial Day for IDF fallen soldiers accessible, which again, I understand that in the public...we know that in the Haredi public it's not... that is, it's less than...precisely that, and I understand they held some adapted ceremony and succeeded in it, and I see this as a very important thing. Of course, every issue regarding a kitchen being kosher, uh, you know, again, and that all the means are available, the day-to-day, the issue of working with men—that is, again, we regulate everything, uh, together. Again, we have, uh, uh, mentors, let's call them, or people from the Haredi public that we work with to do this. I really hope that we will manage now to bring more...we set a goal too, to recruit 90 Haredi women, again, accounting graduates. You have to know that today in accounting, out of about 1,500 accounting graduates a year who receive a CPA license, between 400 and 500 are Haredi women. Meaning, this is today...how do I put it, when I need to bring, and I bring mostly CPAs—this is one of the populations I go to. I see, by the way, a great deal of importance in this. I think that this actually also brings the Haredi public closer to understanding that the Tax Authority is...they are part of it, yes , this integration within the system. Yes, and I truly hope—how I told them at the ceremony, the Finance Minister by the way also came to meet them during the course—and how I told them : I really hope that with God's help in 10 years, some of them will already be tax assessors, and perhaps in 15 or 20 years, an authority director. My daughter actually, she studied at the Lustig seminary in Ramat Gan, where really... There was once some survey or some check done that the highest-level places are really at a very, very high standard, by the way, you also mention mostly there are many women from the Haredi public, there are also men from the Haredi public, here we want [to know] if they don't have enough training yet or if there is some program to train them. I really want to, and we have thus started to work, I again, to... Because it could be that it's also good for you, because many times, you know that you have more access to that same public. Also as such a tax assessor, sometimes it can also benefit the system. I completely agree, and we are indeed trying to create some program together with the administration—the administration for the integration of Haredim that exists for integrating Haredim in the Prime Minister's Office. One of the senior employees there is someone who worked for us in the past, uh, and we are trying to see how to really create a program for bringing in Haredi men. Uh, I say again, unfortunately, that is, we are dealing with this, and then sometimes what are called, uh, events arrive that distract a little from the...distract the attention. But I definitely set it as a goal for, let's say, the two years I have left in my position, to try and truly bring in and integrate the Haredi public. I think it’s good for the Tax Authority and it’s also good for the Haredi public. I think that for a Haredi person looking for work in the civil service, you know, you can finish at four or four-thirty, men maybe at five, and still go to Kollel to study, or spend time with your kids— something very important in the Haredi public. I mean, it’s important to everyone. I know it carries significant importance in the Haredi public and I think it’s very important. And I generally think I should tell you that today we must remember that one out of every four children in first grade is a Haredi child. Meaning, and I say this in a positive light, this is ultimately the economic chance for the State of Israel. If I look back to the early 90s and the Russian immigration, the wave from the former Soviet Union which gave a boost to the economy in high-tech, medicine, and science, and I truly believe it gave Israel 20 to 30 years of great development. Now is the chance for the Haredi public, which possesses very high capabilities—we know this, we see it in Haredi women. By the way, we didn't mention Haredi tax consultants; I am the chair of the Tax Consultants Council, and a significant portion of our consultants are Haredi women, and their grades have been the highest for quite a few years now. So, there’s no doubt that the intellect coming from there is needed by Israel in all sectors, or the work ethic, and that is truly the... Everything, and truly I say again, it is Israel's economic chance to continue being a leading country. We see it with Haredi women and it’s marvelous, and I hope it reaches Haredi men as well, while respecting their desire to keep Torah study, which we understand, of course I also... Whoever is interested in paying and joining the workforce, you are fully attentive and open to accepting them into the system and making the necessary adjustments. By the way, mostly in the Haredi public, the men went more toward law, while the women went more toward accounting. So I assume that regarding the subject, there are. You have roles within the large legal system; our legal department at the Tax Authority is essentially the largest legal department besides the State Attorney’s Office, with 300-something Haredim. There are Haredi guys, and I hope more will come. And in general, I hope that you know, we...that it will happen. And in general, the Israeli economy. Okay, let’s continue for a moment on the Haredi public. There is always a claim that this public goes to work less, each for their own reasons. Now there is a huge public that went out to work, only the problem is that they went to work in somewhat problematic jobs—what is called the "drivers" issue. Yes. They were looking for a livelihood. People want to earn a living, and as we said, they don't always have the skills to pursue tax consulting or law to get stable, organized employment. And there's the phenomenon of the drivers, numbering in the thousands; you surely know better than I what quantities we're talking about. What do we do with this situation? Is there something that can be done about it? They, in the end, really want to work and want to pay taxes; they also want to pay taxes. So is there a way for them to come forward ? I don't know, voluntary disclosure, the ability to regulate this type of employment, or are you saying it's not up to you? No, so I want to say this: first of all , a driver who, so to speak, earned money "under the table," as you said, and wants to regulate his status. As far as we are concerned, there is no problem with them coming forward, and we have a voluntary disclosure process; although it is very specific, it is always available. Actually, we also— let's say again—someone who earned several tens of thousands of shekels, let's say this isn't someone we'll file an indictment against tomorrow morning, again, provided he isn't a repeat offender, so to speak. And therefore, it is possible to come and, of course, regulate it. Certainly, from here on out, I also suggest, there is what is called today a "small business owner," a "patur" business owner, which means you get a certain percentage, even 30% of your expenses automatically, and so on. You can open such a file, it also doesn't require filing—that is, the reports are very simple, you don't need to file annual reports but rather in a much simpler form. So I suggest, maybe for someone who operates as a driver and wants to be a small business owner and maybe even receive money via Bit. I know that is also sometimes problematic , they only want cash, we don't always have the cash and all that, so I say again: they can come and open [a file]. Regardless of that, it must be said we worked together with the Ministry of Transport and with the tax authorities, we acted this past year on the issue of the drivers, we conducted a number of operations, including reaching several places that are so-called dispatch centers, we seized software and so on, but I'm not under any illusions. Meaning, in the end, once there is a market demand for it in the economy, it will likely continue to exist. That is to say, even if we come and carry out an operation, okay? So we did a bookkeeping operation or even investigations, okay? So we caught a few, again. That doesn't mean it won't be back tomorrow morning. Most likely there is market demand for it again, and it's less the...less it is, of course, my responsibility, it's not my responsibility, but I think, again, I think the Ministry of Transport needs to do more; I understand that yes, the Ministry of Transport is moving toward the issue of shared Uber or something like that. I think we need to go, you know, I was—I was recently in— before...I was on vacation in Romania, there they have Uber, they have Bolt, you just call it. I think that is a regulated thing. It is true that there is an argument that this will add unnecessary traffic to the roads, but the fact is that this service is needed ; taxi drivers alone probably don't provide it, so I think it needs to be regulated. I know the Finance Minister really wanted to regulate it, back when he was the Minister of Transportation a few years ago. I really hope this gets regulated, because then it will actually be simpler. I understand that today, the moment such a driver works, he is also afraid to come to the Tax Authority, because he says: wait, if I come and say I'm a driver, then...then immediately, I don't know, the Ministry of Transportation will come after me. Right, so you separate, you say...what you...the Tax Authority will come and ...certainly. That I suggest, it can be completely separate from the Ministry of Transportation, it doesn't touch on that, right? I really hope they regulate it, I know it is very troublesome. He can report that he is a driver. Yes, fine, he reports that he is a driver and says, "Here, I want to declare my income and pay tax." Right, right, of course, but I think, and I really hope, that perhaps later on this will be regulated in a way that, what is called, this issue of ride-sharing will be regulated. In the end, the market needs it, the market needs it, it must be regulated. No, the argument is simply from the taxi drivers; they claim, of course, that the drivers charge less because they work under the table. I know, again, I am less involved in that. In other words, I know about the discussions from the outside. In recent months, I know that there is some move to compensate taxi drivers for their medallions and various other things. All over the world, the Bolt and Uber system...by the way, I want to tell you that I was at a conference a year ago —there is a conference for heads of tax authorities from all OECD countries , once a year. So a year ago it was in South Africa, and South Africa is not exactly the most friendly place. Actually, the instruction we received, the security guidelines we received from the embassy, was: travel by Uber and do not travel by taxi. That is, because with Uber, since it is shared and you see it in the app and there is the driver's history and everything— it turns out it is safer than a taxi. Yes, I don't know, that's how it is there, so there are countries where it has really caught on. Interesting. Okay, let's move for a moment to your home court: real estate and real estate taxation. After all, that was your previous role; you were the Deputy Director of Real Estate Taxation. We are now in a period, the last two years, of a very serious freeze regarding both sales, developers , and so on. There is the issue of purchase tax for a second apartment. Now you have set it at 8%, between 8% and 10%. The question is this: do you intend to encourage the market, yes, to increase sales, to lower or reduce the tax rate, or from your perspective do you still want to calm investor demand, and therefore that is not the solution you see to truly revive the market today? We all know that we are currently under a temporary order that is expiring, right, yes, that is what I am supposed to be, yes, so... The regulation regarding higher purchase tax for investors started—we must remember—it didn't start yesterday. It started sometime in 2010, if I am not mistaken—again, not dramatically. It truly rose dramatically in 2015, I believe during the tenure, at the beginning of the tenure of Moshe Kahlon. Because truly, we know that there were very, very strong price increases in the housing sector, and so...they said: let's lower the demand from investors. And it must be said that this move succeeded— meaning, suppressing the investors hit the demand, essentially. And that is part of what likely lowered the flames a bit, although you know that interest rates are what play the strongest role regarding demand for residential apartments. But right now we are truly talking about a high purchase tax of 8% or 10%. It was supposed to go down on January 1st, 2027, automatically, to return to 5%—which is also, by the way, not low. That is to say, one must remember: even 5%for someone buying an investment apartment for 2 million shekels—and let's say that finding an apartment for 2 million shekels today is not so simple—2 million shekels, 5 %, is still a very high purchase tax compared to a sole apartment where you pay nothing. Here you pay 100,000 shekels; meaning, you are still high, but it is less than 180,000 shekels— than 160,000 shekels, sorry. And it is supposed to return now. Because we are in an election period and there is Section 38 of the Knesset Law and all that, there is this...meaning, our calculation says that we are currently talking about mid-February. Meaning, if the next Knesset does not make a decision to extend the temporary order, then in about mid-February, effectively , the purchase tax on investment apartments will return to 5%. That is a tricky situation—what is your position? But is your position indeed to reach 5%? Again, I...I...the position, I want to...that is, to say here: there is this issue of high purchase tax for apartments, and I also said it when I was Deputy Director of the Land Authority and also today as Director of the Tax Authority—it is more in the court of my colleagues in the government who deal with the housing market issue. With all due respect, the Tax Authority...it is not, that is, it is not the one that decides whether we want to make it difficult for investors or not. We, the purchase tax here is a tool, a tool: do they want to suppress demand or increase demand? It could be, by the way, that as you said, perhaps it is actually correct today to suppress a bit more demand. Meaning, it could be that it is correct. By the way, I have my own position that I express in the meetings held at the Treasury currently. Right now, if I have to state the position of my colleagues at the Treasury—the Budget Department and the Chief Economist, who are ultimately the ones setting the tone on this matter—their position is currently that the temporary order should be extended. I don't know, I mean, the current minister rightfully decided not to get into it, and there is also no Knesset to work with anymore. This is not something you can bring about on your own; it requires agreements and so on. It will be what you might call one of the issues landing on the desk of the next Finance Minister, whether it’s the current one continuing or a new one , and it will be one of the first decisions the next government will have to make. A, I want to say that maybe it is possible right now to perhaps allow it, because as I keep saying, it’s not like you are dropping it to 0%for investors tomorrow, or to half, or 5% —that still won't trigger a stampede on this market, right? And therefore, there may indeed be room to consider allowing what is called a return. Because I do think, and here I want to say—and again, I am slightly stepping out of my role at the Tax Authority, but as someone who, let’s say since 2011 when I moved to a certain role at the Tax Authority and got into real estate—I think we need to pay very close attention to the housing market, because currently there is a feeling that we are indeed in a standstill, and that’s true, meaning there is a slowdown, there are far fewer transactions, perhaps it’s harder, companies are collapsing, there are actual companies...we do need to come and say, and here we need to specify what is needed, it would be mainly with investors and companies, with developers, less so with the young buyer, someone looking to buy their first apartment. True, but I am saying one must realize again that the real estate market is a heavy market; I mean, for example, if there is suddenly a stoppage in housing starts, until—and we have seen this —until you start moving this train again, it can take three or four years. And therefore one must be very careful with it, it is very delicate. I also want to tell you one more thing: I am not one of those who are thrilled by the prospect of companies collapsing, heaven forbid. I also don't think that contractors will lower prices so sharply. We must remember that today, contractors are not alone; they have the lending institutions with them— the lending institution ultimately approves whether or not the contractor can lower prices. Therefore, it is a market that has become very complex since the Heftziba affair, and one must pay close attention to this. I tell this to my colleagues at the Treasury as well: we must be very careful not to cause, you know, we need to be very delicate here. Even though your interest, as the Tax Authority, is to lower taxes, which hurts your revenues. It's not the high purchase tax; the high purchase tax hurts your feasibility, even though we always say that, ultimately, a higher purchase tax is a budgetary source you want to lower. But our position is that , once again, my position is that if more investors return to the market, there will be more purchases, and then, of course, in the total, we will collect more purchase tax. Ah, but I will say again, one must be very careful here, one must be very delicate regarding the residential real estate market. Another thing, there is now some excitement, or fear—that is the more accurate word. There were rumors that perhaps—after all, we know that a seller of a single apartment, a first apartment, has a capital gains tax exemption. A sole apartment. A sole apartment, I am talking about, yes, up to a certain amount. Regarding purchase tax, to mention, we spoke earlier about purchase tax; even for a first apartment, there is a tax bracket exemption, not fully exempted. Right, you start at zero up to a certain point. As for capital gains tax on a sole apartment, it is exempt. Up to a sale price of five-something million, after that, it is proportional —that is the capital gain. Yes, for a sole apartment. Now, there was talk—confirm or say it's not true —that they are going to cancel this, that even for a sole apartment there will be a 25%capital gains tax. Is that true? So I want to say this, and I will also enter into a somewhat more macro topic: you see, we are in difficult budgetary years. Meaning, I don't know if there is a precedent for the fact that, let's remember, in '23, '24, '25, and even '26, the government opened the budgets at least once, if not twice. In other words, we truly understand we are in complex years, of course, due to October, the dramatic rise in the defense budget which was unavoidable. That is to say, the defense budget on the eve of the war was around 80 billion shekels per year. Today we are talking about the fact that we will likely reach around 180 this year, and there is talk that the government will convene soon to open the budget again and raise the defense budget once more, and '27 and '28 will likely not be easy either. Meaning, we still see the State of Israel active on many fronts: Lebanon, Syria, Gaza, and so on. And therefore, money must be brought in. That is, we must remember: this year we are likely going to increase our collection target to around 565 billion shekels. Currently, we are at 555, that is what we are supposed to collect. But I need to collect 565 NIS. My estimate is that by '27 we will already be approaching 600. Meaning, once again, this does not match the growth. Meaning , we must remember that it doesn't match the growth. Meaning, we need to see where more taxes will come from. Now, what I said, and from there you brought up the things you are asking me regarding the residential apartment exemption, is when we basically come and tell them: "Listen, there is no choice." The Accountant General, ultimately, Doron Samuel Bonsohn, sets the collection target for the Tax Authority, how much it needs to collect . He comes and tells me: Listen, Shai Aharonovitch, next year you need to bring in, for the sake of argument, 600 billion shekels, in fact, you're missing another 40 billion shekels almost. Ah okay, so there is natural growth, how much—can you—do you know more or less how much that exemption is costing you, so to speak? So, I—already—the residential apartment exemption is worth between 2.5 and 4 billion shekels a year, it's not a small amount. Ah, okay. It's not a small amount, you, but that's not what will cover the 40. But what I'm coming to say—then they come and say: Okay, we need to bring in this much next year, we estimate that the growth will be such and such. For the sake of argument, let's say you'll reach 570 naturally. Now, where do we close the gap of the extra 30 billion? Now, this is actually our job, the Tax Authority, and it's also something I brought with me to the position. From the perspective that I said all the time: The easiest thing is always to look under the lamppost, and we did things—we froze tax brackets, we froze—after all, we are in three years of freezing tax brackets, even in '27 seemingly there will be, there will still be a freeze. We froze the credit points, we raised the VAT by one percent. But again, in the end, you are what's called "doing more of the same," and eventually it probably hits that same population many times, which is mainly the working person—whether they are a small freelancer, or an employee, and so on. We, I set myself a goal to try and bring in tax from places that were less touched. So if it's the black economy, we really took steps: A, "Israel Invoices," a move that my predecessor in the role managed to pass into legislation together with the minister, also a very brave move. We activated it during the war, and here too, we must give credit to the minister who supported it. It's the cash law that also started under my predecessor, and we have increased [the intensity] and [done] many operations on the subject of the black economy, we will go and increase them. We are now introducing in a month a new computer system for income tax assessments, it is supposed to create a new world. We are integrating AI tools there to reach much, much deeper, what is called into many more reports than we are able to reach today, and also actions, what is called, we did actions in the gray market, a lot of actions in the Arab sector, etc., to bring from there more and more money and billions. And there is the second thing there, it is really to come and examine the existing tax system and come [to conclusions]. Now, we always start budget discussions, when we actually start cooking the [ budget] together with the Chief Economist, we first of all look, open the screen, and see how much the various exemptions that the State of Israel gives cost, and we reach close to, between 90 to 100 billion shekels. Meaning, so there is the residential apartment exemption there, and there is the exemption on rent, and there is the exemption, and there is the 0%VAT on fruits and vegetables, there is the VAT exemption in Eilat, and there are the credits and deductions for pension contributions, and there are the continuing education funds, and so on. I think that when you start, once again , when you start and you ask where can I, so to speak, make changes—again, black money, sure—but where do I need to do things, because there’s no choice, you have to bring in revenue, it’s better to start from there and come and examine things according to axioms that have existed for many years . By the way, back in the day, during Moshe Asher's time, I was then the Director of the Real Estate Appraisal Department, we managed to cancel—that was also an earthquake in 2013—we managed to cancel. There used to be a blanket exemption for selling a residential apartment once every four years; it didn't matter how many apartments you had, you could sell an apartment with an exemption, unlimited and everything, it was absolute. The idea at the time was also to make it for a sole apartment only and to lower the ceiling to 4 million, today it's already 5 point something. That was a step where they said, how should I put it, the heavens would fall, but thank God—people didn't stop buying apartments, didn't stop selling apartments, they pay 25%tax. I’ll say it again, can I tell you that I think it should be done tomorrow morning? I’m not sure. But these are the kinds of things that need to be examined. Because again, at the end of the day, what do we prefer? To raise, to raise corporate tax? Do we prefer to raise the tax on individuals again? On the contrary, personal taxes, in my opinion , we should try to see how we leave more money with the people. But with capital gains tax, at the end, you made a profit, your real profit is—so you pay 25%. I Why don't you make it, then, a differential tax? Meaning, you suggest some kind of tax brackets. It may be that it would actually give someone selling their only apartment, even if they made a profit, not to pay the 25%, but rather to build a bracket. But you cannot say today, no, no, you don't need to give them a discount at all, not the one selling. And I remind you, always know, you always need to know: when you make a move like this today, actually, a person who has a sole residential apartment has a vested right to receive an exemption. You cannot decide this today, even as we learned in 2013, you cannot decide overnight on 25%tax. It basically cannot apply retroactively. Meaning, even if one day they decide this, it will apply from then on and they will create some kind of linear mechanism. Therefore, it’s not as if a person needs to run and sell today. But I want to tell you, we are currently doing staff work at the Ministry of Finance together with the Chief Economist, and also with the Budget Department. We are actually examining, preparing plans for the next government, for the next Minister of Finance. We are examining things, including the issue of pensions —whether the current contributions, the credits and deductions, are perhaps excessive for what is provided for pensions? Maybe we are forcing too much to be contributed to pensions. There is a question here. We are generally examining the issue of individual taxation because I think that today, when a person reaches 20-something thousand shekels and already gets close to 50%when including National Insurance and health tax, it is a problematic situation. We are examining the subject of our VAT policy. It may be that we think we need to move to a slightly different VAT system than today's. "VAT Online" is what they call it, where the VAT is paid only when you receive the money, immediately, and that way you also get your input tax credited. And not like today where there is a delay, a delay that is sometimes for the better, you are relieved, and sometimes for the worse. I must say that since this plan was published in recent weeks , I have received a lot of feedback, especially from those relatively small employers, who tell me: "Finally, we... " Someone told me he worked—I don't want to say which municipality—with a municipality, and they regularly force him to issue an invoice, he gets the money after four months, and he pays the VAT exactly on time, and basically that's...that is why I say it, we want to move to such a system. By the way, this is also a war on the black economy ; our calculation is that it will bring in several good billions. What I am saying again, as far as we are concerned, everything is on the table, we will examine it, God willing. Yes, and I say again, in the end, one must remember. Most likely 27 and 28, whose budget law will likely be joint and whose arrangements law will be joint, are not going to be easy years in terms of state expenditures. I hope there will be growth so that we won't need to raise taxes much, but the goal is truly , in the end, to bring smart things and things that will harm the public less, rather than taking seemingly easy steps , which I like less. Another way you are trying to fill the coffers is the inheritance tax. There is also talk about bringing back the inheritance tax. Is that just at the level of talk, or are we already in...? So, inheritance tax is one of the things currently being examined in the Treasury. I must say that regarding inheritance tax, one must remember, first of all, there is an inheritance tax today. What do you mean? When a person inherits a property today, whether it is real estate, shares, etc. , at the end of the day, it is true that at the time of the deceased's passing he does not have to pay the tax , but the heir, when he sells in the future, effectively also pays on the value appreciation that occurred while it was held by the bequeather. Meaning, it's not possible, it's not that the exemption of 49 is for a single apartment, it is a single apartment but that is the only exception, that is the only exception. Everything else, you are basically paying, you are also paying on the value appreciation that was with the bequeather, and therefore it is not so simple, it is deferred to the time of realization. Our problem with an inheritance tax—which is why the estate tax that existed until April 1, 1981, was problematic—is that the mechanism to operate it involves very high friction. Why? Because a person actually passes away then. Let's say there are stocks on the stock exchange; it's easy to know what they are worth. You have a benchmark, meaning you know how much a share was worth on the day of death. For other assets, it is not clear at all. Meaning, even with real estate, you have to go—and yes, you have websites and everything—but then valuation battles will begin. The heir will want to come and claim it is worth as little as possible because they don't want—I mean, it will start, there won't be a single event without arguments. The same goes, of course, for a business: the father bequeathed a business, what is it worth? And all this, when is it most convenient to tax ? When you have a sale to a third party , but here you don't have a sale to a third party. And therefore I say once again, operationally it is very heavy. I'm not even talking about the fact that it might cause people to create trusts again, or leave the country. No, we really want to bring in new immigrants, we have given tax breaks for new immigrants. This could come and tell people—people will say: forget it, why should I move there? I will be taxed. Therefore, I don't think it will return. They are examining it, but I don't. I think we can be calm here, I think it won't...A final question to conclude on the topic of options. We talked about it, specifically employee stock options for high-tech, which is something guys are very interested in. Currently, it is at 25%. And you are somewhat supportive of raising it to 30%. So I want to say again, this is also, you know. I don't want to say "harm things," but the question is if you don't think you're hurting the...the engine called high-tech, which is, after all, an engine. So I want to explain: look, I am saying in this area , as I said, I spoke about exemptions and breaks—nothing in this regard should be sacred. Meaning, it is allowed every few years to examine things; not everything is an axiom. I must say that we established in the Tax Authority—there was always an economic division, but today it is headed by Dr. Ofer Dror, a PhD in economics whose expertise is research, and we are really trying to check— part of it is trying to examine all kinds of measures that have existed for many years, are they really correct and beneficial? The issue of what I said, and they quoted me and later my colleagues in the Treasury expressed themselves differently, etc., was that this too is allowed to be examined. What is the intention? It could be, for example, that one needs to come and say : "Okay, an option for an employee up to, let's say, who sells what is called stock options and has income from that of, say, 3 million shekels, on that it will be 25%." But someone with a very high amount will already cross a certain bracket, will move to 30%. It is permitted to examine this. We want high-tech here; high-tech is very important, it brings in, one could say grosso modo, a third of the Tax Authority's revenues. The recent exits that were...[interrupted] The exits, the exits certainly, and high-tech in general is important; it is very, very, very important to the State of Israel. This is the Jewish brain at work here. One must come and say, and truly, we want them here, and we don't want to harm them, but there are things that need to be examined. Once again I say, in the end, one must remember: we are not the ones who ultimately decide. When people go to the polls they choose, there is then a government, there are ministers, there is a Knesset. They are ultimately the ones who choose, we are here to provide the recommendations. It is permitted to examine things and see if there are things that can be improved, and so on. And as I said, it is not certain that if I were to go and ask a high-tech programmer or an engineer who has options today, and ask them: listen, if your options end up being worth 20 million shekels, then let's say on a part of that you will pay 30%—would you consider that fair? And on your monthly salary, perhaps you would pay a little less? It is possible they would say: you know what, if the company really hits what you call a bonanza like that, then fine, I'll pay 30%on a portion, but today, let me pay a little less. How to examine these things once again, in the end. You say this is all at the examination level, there aren't any reforms right now that are imminent. We are working on things and we will present them, but in the end, the ones who decide on reforms are the ministers , the minister, the government. The public, the public is very interested in what your position is. After all, you are the ones submitting it; in the end, things get published, things also come out. That is why I also say again: I really like and it is good to receive feedback; not all the wisdom is found with us. Often it is good to get feedback from the outside; people in the business market sometimes see things more accurately and that is okay, and we listen and acknowledge that. It is as we said, as we have said : we are checking, checking a great many things. Ultimately, we will make recommendations. Those who will decide will be the next government, of course. Okay, well, thank you very much. Thank you for coming, thank you for dedicating your time, and thank you also to Idit Lev-Zarhia the spokesperson, who coordinated the whole matter and worked hard for this event. So I want to say to you first of all, thank you. It was very important for me to come here and to be interviewed. I want, of course, to wish everyone—we are already, one could say, within the High Holy Days, Rosh Hashanah is already here, God willing Rosh Hashanah , Yom Kippur—so really to wish a happy new year, and a good inscription and sealing. They always laugh at my synagogue during Avinu Malkeinu— Saying "tear up our harsh decree" or " have mercy on us" and so on, well, I am often asked to say that part during the Ne'ilah prayer. So I really want to wish everyone a good year, a year that is economically and securely sound, with God's help, for the State of Israel and for everyone, and a good final sealing. Thank you again, thank you very much Shay, and thank you to you, dear listeners and viewers, see you in the next episodes. You have been listening to "Esek U'Ma'aseh" from Mishpacha Podcast. I am Yossi Palai. Thanks to content editor Tehila Siton, production manager Ayala Goldstein, and sound and video editors Avri Wizel, Daniel Levin, and Ayala William. All series and episodes are waiting for you on the Mishpacha website, on all podcast apps, and on the phone line 0772, extension 66. See you in the next episodes.