Dei'ah veDibur - Information & Insight

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19 Iyar 5760 - May 24, 2000 | Mordecai Plaut, director Published Weekly








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Tax Sanctions on Businesses Operating in Illegal Buildings

by Betzalel Kahn

A number of weeks ago, the Ministerial Committee for Administration and Organization decided to establish new regulations which will levy taxes on businesses operating in structures which haven't received building and occupancy permits.

According to an article in Globes, the committee asked the Finance Minister to establish new regulations within the framework of the income tax law. According to these new regulations, expenses for rentals, losses, renovations and the like incurred by businesses which operate in illegal buildings will not be recognized for tax purposes. Since the appearance of that article, kibbutz businessmen have been pressuring various government ministers to cancel that decision of the ministerial committee.

The proposed decision in the ministerial committee was made by Religious Affairs Minister Yitzchak Cohen, and was approved by a majority. Cohen said that this decision imposes sanctions on business owners in the kibbutzim and in various other places, many of whom desecrate Shabbos publicly. While fully justified on their own merit, these new regulations will also adversely affect all those Shabbos desecraters, if not directly, then indirectly.

The new regulations will make it uneconomic to operate businesses in illegal buildings -- among them businesses which in kibbutzim such as Gaash, Shefayim, Batzra, Bilu and hundreds of other places -- where business are located in structures built on land zoned for agricultural use, where the various planning committees never approved the change in the use of the land. These businesses have no permits to operate in such buildings, and their owners will have increased tax expenses due to the illegal operations.

A letter sent by director of the Israel Land Administration Avi Drexler to Minister Chaim Ramon, who wrote Drexler in response to the appeals of commercial bodies to him, indicates that there are many such illegal buildings on agricultural land. "This is an economic process which will be more effective than demands to vacate and destroy these non- agricultural structures built on land zoned for agricultural use," Drexler writes.

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