Functions of the Ministry
The Ministry of Finance is the main economic ministry of the Government of Israel. It is responsible for planning and implementing the Government's overall economic policy. In reflection of this, the Ministry prepares the draft State Budget and monitors implementation of the approved budget, manages state revenues and collects direct and indirect taxes, promotes nonresident investments and conducts the Government's economic relations with the Government of the United States, regulates the capital market, savings, and insurance, and maintains auxiliary units for government ministries in motor vehicles, computer services, and printing.
The Ministry's head office has two staff units-the Unit of the Economic Advisor (headed by the director of the Economic Research and State Revenue Department) and the Unit of the Legal Advisor. The head office also handles several general areas of activity: personal compensation, retirement benefits, absentee properties, and international relations.
Structure of the Ministry
TYPES OF UNITS IN THE MINISTRY OF FINANCE
The units of the Ministry of Finance may be categorized by the three types of service they provide: government staff services, general economic staff services, and auxiliary services for government ministries.
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Government staff services-departments that act on behalf of units and operations of the government: budgeting of government operations (Budget Department), operations of the Accountant General, economic services in the United States, and control and auditing of Finance Ministry operations (Internal Audit Unit).
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General economic staff services-departments that act in matters pertaining to the economy at large: handling and encouragement of nonresident investments (Investment Authority), management of state revenues (State Revenue Administration), and regulation of the capital market, insurance, and savings (Capital Market, Insurance, and Savings Department). The Income Tax and Property Tax Department implements the Income Tax and Property Tax ordinances; the Customs and Value Added Tax Department collects indirect taxes (those pertaining to imports, domestic manufacture, and added value).
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Auxiliary services for government ministries-motor-vehicle services (Government Vehicle Administration), computer services for the tax departments (Computer Service), and printing (the Government Printer, a business enterprise owned by the Ministry of Finance).
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DEPARTMENTS OF THE MINISTRY
Budget Department
The Budget Department administers public expenditure and has three main functions: (a) a central Government unit for planning and budgeting; a liaison agency that coordinates and facilitates the entire government and public budget-planning system and engages in multi-annual planning-at the levels of the economy at large, economic sectors, and specific industries-as a basis for the short-term and long-term working plans of Government ministries; (b) a staff unit of the Finance Ministry and the Government for general aspects of the Government's decision-making process; in this capacity the Department handles initiatives for changes in government policy and decisions at all levels of implementation; and (c) elaboration of macro-economic policy.
Department of the Accountant General
The Department of the Accountant General manages state assets, implements the state budget, funds government operations, receives revenues, and makes payments. Its duties include financial and land transactions; management, purchase, sale, and operation of properties for the Government; supervision and control of state liabilities; elaborating financial and economic procedures for Government ministries and adjusting them regularly to reflect current needs; managing the accounts of the Government, its ministries, and its units; drawing up regular and periodic financial statements with respect to these accounts; and reporting on all the foregoing operations to the Knesset and to the State Comptroller.
The Department applies budgetary and administrative control of individual ministries' budget implementation and sets priorities in funding their expenditures by means of a comprehensive inclusive funding plan. It does this by maintaining continuous liaison with the ministries' accountants (who are subordinate to the Accountant General), by gathering the accounting data, and by inspecting extra-governmental agencies that interrelate with and have financial commitments to it. The Accountant General carries out transactions in the name of the state and assures funding for government activities on the domestic and international financial markets. To accomplish this, the Accountant General maintains relations with the banking system in Israel (for domestic transactions) and abroad (to assure lines of credit for the economy). The Accountant General manages the domestic and external national debt, raises capital by means of the Israel Bonds organization, implements the State Guarantees Law, provides guarantees under the foreign trade risk insurance program, administers procedural instructions and regulations in financial management, facilitates individual ministry accountants, and gazettes the Financial and Economic Regulations.
Government Vehicle Administration
The Government Vehicle Administration, a staff unit of the department of the Accountant General, manages the vehicle fleet of the Government and its ministries. In the main, the Administration elaborates and implements procurement policy, oversees the maintenance and operation of motor vehicles, sets motor-vehicle standards, issues operating instructions and procedures, provides general and in-service training for employees in transport occupations, and manages a system of operational and economic information. The Administration is headquartered in Jerusalem; its national pool unit is located in Jaffa; and it has regional technical inspection units in Jerusalem, Tel Aviv, Haifa, and Beersheva.
State Revenue Administration
Structure: the State Revenue Administration is a staff unit in charge of the tax departments-Income Tax, and Customs and VAT. In its main functions, it advises the Minister of Finance and the Ministry administration in tax affairs, elaborates guidelines for the tax departments, prepares the annual state revenue budget, initiates proposals for changes in the tax system and the tax units' organizational array within the limits of government economic policy, assumes overall responsibility for tax legislation, monitors the performance of Revenue Administration policy in the tax departments, performs economic and other research on taxes, coordinates research in these respects among the tax units, and provides the public with information on tax affairs.
Economics And Research Department
The economics and research department gathers and processes information on economic developments for the Ministry administration; participates in elaborating economic-policy measures; monitors economic indicators and current economic developments in Israel and abroad; reports to the Ministry administration and the monitoring committees; advises and assists other Ministry units in macro-economic affairs, including issues pertaining to wages, prices, taxes, budget, employment and unemployment, profitability, balance of payments and foreign-currency debt, and miscellaneous topics; devises comprehensive macro-economic models to assess future trends of the domestic economy, as a basis for economic policy proposals that take the economy's short- and long-term goals into account; and represents the Finance Ministry vis-a-vis public institutions, organizations, and media in Israel and abroad.
Income Tax and Property Tax Department
The Income Tax and Property Tax Department collects direct taxes and performs other operations pertaining to them. The Department operates by force of several statutes: the Income Tax Ordinance, the Income Tax-Inflationary Adjustment Law, the Land Betterment Tax Law, the Property Tax and Compensation Fund Law, the Encouragement of Industry Law, the direct-taxation provisions of the Encouragement of Capital Investments Law, the Value Added Tax on Nonprofit Organizations and Financial Institutions Law, the Tax (Collection) Ordinance, and the Employers' Tax Law.
The Income Tax Department is composed of a staff unit and central services known collectively as the Income Tax and Property Tax Commission, 23 income-tax offices, ten property-tax and land-betterment tax offices in various locations countrywide, four regional investigation offices, three regional offices of the Bailiffs Service (Tel Aviv, Jerusalem, and Haifa), and two staff offices for taxes.
The Income Tax Commission is divided into eight professional departments, each headed by a deputy commissioner: administration and organization; assessments and intelligence, customs and Value Added Tax investigation, professional affairs, legal affairs, bookkeeping, collection and deductions, and land taxation.
Customs and Value Added Tax Department
The Customs and Value Added Tax Department collects indirect taxes on imported goods, domestic manufacture, and services. The taxes in its purview are customs on imported goods, Value Added Tax on all economic transactions, purchase tax on imports and domestic manufacture, and stamp tax on documents.
Apart from taxes, the Customs Department, by force of the appropriate laws, awards tax refunds or exemptions for products that the Government is interested in encouraging for export or import. A conditional exemption is given for imported goods when the Government wishes to encourage such imports, and exporters are given refunds on account of taxes paid on raw materials for the manufacture of exported products.
The Department administration is divided into the following eleven professional departments: collection and enforcement-VAT; Audits and Assessments; Investigations; Value Added Tax; Customs and Purchase Tax; Computer Services; Economic Planning; Legal Advice; Internal Audit (Professional And Administrative); Financial Administration; and Accounts and Administration.
The Department has five customs houses, at Ben-Gurion International Airport, Haifa, Tel Aviv, Ashdod, and Jerusalem (as well as a customs station in Eilat); a purchase tax-department in Tel Aviv and 14 external stations, each responsible for a geographical region; four investigation units; a staff officer unit that applies the tax laws in Judea-Samaria-Gaza by means of customs stations in major towns and regular customs inspections at the two Jordan River bridges (Allenby and Adam); and units at the Egyptian border crossings (Rafah, Nitzana, and Taba).
Computer Service
The Computer Service manages the computer information systems and provides system development and maintenance services for the following agencies: Income Tax (self-employed and companies), income tax in the territories, deductions, property tax, land-betterment tax, Value Added Tax, the tax corresponding to VAT in the territories, purchase tax, investigations, and intelligence.
The computer service also assists taxpayers' representatives such as CPAs, lawyers, and tax advisors.
In regard to any aspect of taxation, the Computer Service makes information systems available in several respects: taxpayer network management, the reporting and assessment systems by means of which taxpayers' tax liabilities are determined, the bookkeeping systems that taxpayers and businesses use to keep their, collection and enforcement systems, and support systems for intelligence information.
Tax Museum
The Tax Museum, part of the Economic Research and State Revenue Department, is a repository of academic and visual material on the development of taxes from antiquity to the present time.
Every aspect of the life of a nation and its inhabitants is manifested in taxation of some kind. The story of a tax system is also the story of a nation, a country, and its inhabitants in the past and the present.
The museum contains diverse kinds of material-documents, papers, and historical photos-that reflect the operations of tax administrations in Israel throughout the march of history.
Although rather small, the museum is unique in the landscape of institutions of its kind. Within its confines, the country's history to the present day is told from a unique point of view: taxation.
The Tax Museum is located in the Customs Administration building at 32 Agron Street, Jerusalem. For further details, call 972-2-670-3201.
Capital Market, Insurance, and Savings Department
The Capital Market, Insurance, and Savings Department raises capital to finance the state budget and implements Government policy in various aspects of the fields that comprise its name. Its operations include planning and performing state bond issues, developing savings instruments and approving savings plans, approving the formation of mutual funds and trust agreements, regulating and examining the investment rules of provident and pension funds, approving overseas issues, and participating in regulating and developing the operational infrastructure of the Israeli capital market, in conjunction with the Securities Authority, the Tel Aviv Stock Exchange, and the Bank of Israel. The Department applies statutory powers under various laws, including the Securities Law, 1968; the Mutual Investment Law, 1961; the Encouragement of Savings (Income Tax Reductions, Guarantee of State Loans) Law, 1956; various laws pertaining to state borrowing, and the Income-Tax Regulations (Rules for Approval and Management of Provident Funds). The Department also regulates the insurance industry by licensing insurance companies and maintains stability and taking actions to protect the insured public; inspects the capital requirements pertaining to insurance companies, reserves to cover future claims, and modalities of financial reporting; regulates insurance premiums and plans; licenses insurance agents; and protects the rights of the insured. In this regard, the Department operates mainly under the Regulation of Insurance Transactions Law, 1981; the Insurance Contract Law, 1981, and the Compensation for Traffic Accident Casualties Law.
Wage and Labor Accord Unit
In its major functions, the Wage and Labor Accord Unit coordinates actions and wields executive power in the application of wage policy in the governmental and public sector (the Civil Service, the defense system, state-owned enterprises, government authorities and corporations, institutions of higher education, the education system, local government, and nonprofit organizations); maintains relations with the Coordinating Bureau of Economic Organizations and the Histadrut with respect to wage policy, Cost-of-Living Allowance agreements, and framework accords; engages in collective bargaining with the Histadrut and individual trade unions, sets the wages and service terms of defense-system employees, civil servants posted abroad, and local employees in areas under military administration; coordinates, regulates, facilitates, and applies control of wages in the governmental and public systems; coordinates the actions of Finance Ministry units with respect to wage policy and its implementation; deals with collective labor disputes in the government and public systems; initiates and monitors legislation pertaining to labor relations and wages; and represents the state in litigation and arbitration proceedings involving the public services. The Unit is building a database of public-sector wages (involving approximately 900 budgeted and/or supported agencies), as required under Amendment 16 to the Foundations of the Budget Law, which also instructs the Unit to present the Knesset with an annual report on such agencies' wage data.
International Department
The International Department coordinates relations between the Ministry of Finance and foreign governments, international organizations, and miscellaneous agencies, in conjunction with the Ministry of Foreign Affairs and other Government ministries that engage in economic affairs.
The Department prepares material for negotiations with various countries, promotes bilateral economic relations with numerous countries and international institutions. It participates in negotiations on the economic aspects of the peace process, performs staff work and prepares background material for Ministry officials' contacts with foreign countries and international organizations.
The Department provides economic information for Israel's representatives worldwide, as well as for bi-national trade bureaus in Israel and overseas, foreign diplomatic missions in Israel, and foreign journalists. It provides up-to-date information on main economic developments and economic-policy decisions by preparing information sheets, and maintaining an Internet web site in Hebrew and English. The Department organizes meetings of the International Economic Forum in Israel (composed of foreign economic envoys stationed in Israel) and keeps its participants abreast of economic policy.
The Department is responsible for coordinating the Committee of Directors-General for International Economic Affairs.
Government Printer
The Government Printer handles all the printing needs of government ministries, from printing of securities and minting of coinage for the Bank of Israel to general printing and standard forms. By keeping an inventory of paper for general and secure printing on hand, the Printer fills orders from government ministries on an ongoing basis even in times of emergency. Secure printing jobs are carried out at the securities printing facility, general printing jobs are performed at the general printing facility at Ramle Prison, and some jobs are outsourced. Jobs carried out at the secure printing facility, where appropriate protective arrangements have been made, include regular and memorial stamps, aerogrammes, passports, test forms, government checks, documents of monetary value for government ministries and state authorities, and tickets for the state lottery and the Soldiers' Welfare Committee, to name only a few. The Government Printer Mint turns out coins for circulation, memorial coins, and state medals. Documents produced at the general printing facility include draft legislation; laws; the Book of Regulations; the Publications Gazette; the Report of the State Comptroller; textbooks for Educational Television, the Judea-Samaria Administration, and the Gaza Administration; the State Budget Proposal; budget regulations; forms and information pamphlets for government ministries; telephone books, and election materials.
Rehabilitation Office
The Rehabilitation Office applies two "social" laws that the Knesset passed in the 1950s to assure medical treatment for disabled persons who meet the eligibility requirements, as well as financial compensation, by means of a monthly benefit commensurate with the degree of recognized disability. Since these laws were passed, various amendments have expanded the population of eligibles.
The Persons Disabled in War against the Nazis Law, 1954, assists those who incurred physical or mental disability while serving in the Allied armed forces or in partisan units in World War II. The law also provides certain entitlements for the surviving spouses of such persons, for a limited period of time or until they remarry, depending on the extent of disability authorized for the original beneficiary shortly before his or her death. Until the recent mass immigration from the former Soviet Union, 4,500 persons were recognized as disabled for the purposes of this law. Today, 9,163 persons are so recognized.
The Persons Disabled by Nazi Persecution Law, 1957, is an internal statute that applies the reparations agreement (the Luxembourg Agreement) that Israel concluded with West Germany in the early 1950s. It assures medical care and a monthly benefit (commensurate with the degree of recognized disability) for 21,326 disabled persons who, after surviving extermination camps, concentration camps, and ghettos under Nazi rule, have been declared mentally or physically disabled. Also eligible are persons who fled the German terror or were exiled to the Soviet Union and emerged from these ordeals with mental or physical disabilities.
Office for Personal Compensation from Abroad
The Office for Personal Compensation from Abroad processes Israel residents' claims for personal compensation or social insurance from the Federal Republic of Germany. Its services are provided at the request of the German authorities and Israeli applicants.
The Office has three departments: (1) the Medical Department, which gathers medical documents, translates them, and refers to claimants medical examinations; (2) the Testing Department, which tests the German linguistic and cultural affiliation of the applicants; and (3) the Information Department, which prepares life and death certificates and provides the German authorities with general information. The Office interacts with 67 trustee physicians in various specialties and eleven translators of medical documents. The Government of Germany covers 90 percent of the Office's budget.
Internal Audit Unit
The Internal Audit Unit audits all ministry units, either by itself or by means of the department's internal audit units; reports its findings to the Director-General of the Finance Ministry and the directors of the audited units; and monitors the correction of irregularities found in the internal audits and in audits by the State Comptroller. The operations and powers of the Unit are delimited by the provisions of the Civil Service Code and procedural instructions of the Finance Ministry.
