Arab Uprising's Other Toll
To fight unrest, Israel makes Palestinians pay new and higher taxes. TACTICAL TAX
JERUSALEM — SOLDIERS and tax officials sweep into Ahmed's tiny West Bank store. Claiming he owes back taxes on his annual income of several hundred dollars, they bill him $250,000. The soldiers search Ahmed's home and confiscate $3,000 in savings. Ten miles away, near Ramallah, Adnan, a college student, is arrested and told to pay back taxes owed by his father. He protests that he has no money. Soldiers insult and punch him, seize his ID card, and force him to wait in line seven hours a day for a week to obtain temporary credentials.
Scenes like this - the first reported in an Israeli newspaper, the second from an affidavit filed with a human-rights group - have become commonplace around the occupied West Bank and Gaza Strip as Israel continues to flex its fiscal as well as its military muscles to bring an end to the 19-month Palestinian uprising.
At one level a matter of taxes and revenue, these incidents epitomize the struggle between Israelis and Palestinians for control of the West Bank and Gaza, which were placed under military occupation by Israel in 1967.
Israeli sources say more aggressive methods of assessing and collecting taxes from Palestinians are needed to compensate for the loss of revenue resulting from a business slowdown caused by the uprising and from the refusal of many Palestinians to pay taxes as a form of civil disobedience.
But Palestinians say a variety of new taxes and sometimes abusive means of collecting them, including nighttime ``tax raids,'' confiscation, and onerous administrative requirements, are punitive measures designed to make life as miserable as possible to break the spirit of the uprising.
At stake for Israel is political control of the West Bank and Gaza and the money needed to pay for the occupation. Both are challenged by the uprising. As stake for Palestinians are everything from wedding plans to new businesses, permits for which are now held hostage to Israel's determination to use taxes as an instrument to combat the uprising.
``It's gratuitous and tyrannical,'' says one Western development official. ``The creativity of the authorities in thinking up new things to tax has reached new heights.''
``It gets to the heart of the way Palestinians feel they are being treated by Israel,'' adds the official about a system which is invariably described by Palestinians as arbitrary and humiliating. ``Together with the use of brutal force, it jeopardizes the ability of Palestinians ever to live with Israel and to make peace.''
At the core of the dispute over taxes is the question of whether Israel earns a profit from the occupation.
Before the uprising, Israeli sources estimated annual revenues from the territories for fiscal 1987-88 of $140 million - the amount needed to provide basic services - from income, value-added (VAT), and property taxes, plus a variety of special fees. After the intifadah began in December 1987, the revenue estimate was lowered to $100 million.
Palestinians respond that when all sources of revenue from the West Bank and Gaza are figured in, including customs duties on imports to the territories and income taxes paid by Palestinians working in Israel, Israel ends up collecting far more in revenue than it reinvests in the territories. One leading Palestinian economist estimates total income from the territories at $537 million in 1986.
According to the West Bank Data Project, an Israeli research institute, in 1987 Israel used at least $80 million in funds collected from Arab residents of the territories for expenditures inside Israel. International law allows an occupier to raise taxes but prescribes that they be used only for the benefit of the occupied population.
Palestinians also point out that taxes paid by Arabs are also used for the benefit of Jewish settlers.
No budget detailing revenues raised from the territories is published by the civil administration.
One Israeli security source insists that there has been no change in Israel's tax collection methods.
The official attributed recent tax increases to higher costs of the occupation and said many taxes inside Israel have also been raised due to normal cost of living increases.
When it took over the West Bank in 1967, Israel inherited from Jordan a system of direct taxes on income and property and indirect taxes including import duties and excise taxes on locally manufactured goods.
During the first 20 years of the occupation, income tax rates were substantially increased. Meanwhile, Jordanian tax courts were abolished as Israel turned over the appeals process to the same tax officials responsible for assessing taxes in the first place.
Since the start of the intifadah, Israel has stepped up its tax enforcement efforts in two ways:
New and increased taxes. The most dramatic example was a one- time tax imposed last September on automobiles and other vehicles that cost their owners an average of $450 and which, by next September, will have raised $24 million in revenue for Israel.
In addition, a VAT averaging $2,500 was imposed for the first time last fall on olive presses, just days before the short time critical to the processing of the West Bank's leading crop was due to begin.
Since the start of the uprising there have also been sharp increases - disproportionate increases, Palestinians say - in fees for such Israeli-provided services as hospital care.
More aggressive enforcement of tax laws. One new tactic has been to link the granting of over 25 permits ranging from drivers licenses to birth certificates to the payment of all taxes. The measure has made it impossible for Palestinians to use selective non-payment of taxes as a means of civil disobedience to protest the Israeli occupation.
Another new tactic has been the enforcement of VAT on business transactions. VAT collections have always been problematical since Palestinians have either been unable - or, since the start of the uprising, often unwilling - to fulfill the bookkeeping requirement imposed by Israeli military law. While such failure was often ignored in the past, Israeli authorities are now using it to demand enormous sums, often based on arbitrary estimates of the volume of business transactions and often many times higher than previous monthly VAT assessments.
In the meantime Israel has slowly whittled away at the safeguards that one protected the rights of taxpayers before property could be confiscated.
``There's an atmosphere of utter lawlessness about it,'' says Palestinian attorney Jonathan Kuttab, who specializes in VAT cases. ``It has become grand larceny.''
At the root of Palestinian discontent are the arbitrary and often intimidating methods by which tax laws are enforced. According to the Palestinian human rights organization Al Haq, these methods include frequent tax raids by Israeli soldiers and tax officials in which curfews are imposed, stiff taxes and fines are levied, and property and ID cards confiscated without due process.
Under a 1988 military order, Israeli tax collectors can use force to break into homes to collect taxes without judicial process.
Tax officials often penalize third parties for the non-payment of taxes by relatives, friends or employers, the rights group contends. Meanwhile, Palestinians complain of being forced to wait in tax lines for dozens of hours, often over the course of several days, to obtain a single permit.
``It's gratuitous humiliation,'' says the Western development official. ``They seem to hope that this will wear down the population and that the intifadah will ease off.''
``The most important element in the crackdown is that it is completely arbitrary,'' says Ghassan Al Khatib, an economist at Bir Zeit University in the West Bank. ``There are simply no rules.''