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Hundreds of thousands of people are missing out on benefits

In new report, ombudsman says Tax Authority owes Israelis $1.1 billion

State Comptroller faults Tax Authority for not returning excess taxes it collected; also reveals state has only received fraction of projected royalties from offshore gas drilling

A sign pointing to a tax authority office in Israel. (Flash 90)
A sign pointing to a tax authority office in Israel. (Flash 90)

The State Comptroller’s Office on Tuesday said tax authorities owe Israelis more than $1 billion from excess taxes that were collected.

In its annual report on the economy and infrastructure, the comptroller said various errors have resulted in hundreds of thousands of people missing out on benefits. He charged that the Israel Tax Authority has not done enough to fix the underlying problems causing the situation, though they have been known since an ombudsman report from 2015.

The report said the Tax Authority fails to notify citizens that they are owed money even when it has the information on file. It also said the current sum owed by the Tax Authority to Israelis is NIS 3.6 billion ($1.1 billion).

“Tax money collected from citizens is private money and the state must return it. The Israel Tax Authority is not being proactive in giving tax refunds to those eligible,” State Comptroller Matanyahu Englman said in the report.

In the report, Englman also said that despite authorities’ predictions that taxes from gas drilling off Israel’s coast would amount to some NIS 12.5 billion ($3.8 billion) by the end of 2022, the country is way off target.

So far, he said, income has amounted to NIS 741 million ($230 million), or some 6 percent of the predicted sum.

The platform of the Leviathan natural gas field in the Mediterranean Sea, pictured from the northern beach of Dor, on December 31, 2019. (Jack Guez/AFP)

Englman said the government’s efforts to collect taxes from gas drillers are slow and insufficient, and that the Energy Ministry has failed to follow world trends on taxation.

“The government is not acting effectively to realize the earnings potential of the gas and to increase the wealth of the public coffers,” he said.

He called for better cooperation between the Energy Ministry, Tax Authority and other agencies on collecting the royalties.

Englman also addressed the surge in housing prices in recent years, which he said jumped 103% from 2008 to 2020.

The report found 80,000 plots of land to build on were marketed at the time, around just a third of what had been agreed on by the state and various government agencies.

State Comptroller Matanyahu Englman speaks at the annual justice conference, on September 3, 2019. (Tomer Neuberg/Flash90)

Additionally, the report also found faults with Rav Kav bus cards and with ensuring that those with disabilities can access public transportation.

“There is insufficient protection of Rav Kav user information in accordance with the law on privacy protection,” Englman said. “Cyber defense is one of the most important issues and we are monitoring it on all levels.”

Concerning access to public transportation, Englman said 60% of those with disabilities are not content with their level of access.

“We have a great obligation to those with disabilities and the state needs to do much more to provide them with a proper response,” the ombudsman said.

The report followed several others Englman released earlier this year, which among other topics dealt with the government’s response to the COVID-19 pandemic, domestic violence, violent crime in the Arab Israeli community and the education system.

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