A new dawn has broken for the public seeking to obtain information about the tax breaks granted to large companies. The Tel Aviv District Court today ruled in favor of the petition by "Globes" and its deputy editor Eli Tsipori to disclose the list of companies that have received tax breaks under the Law for the Encouragement of Capital Investment.
In her decision, Judge Dr. Michal Agmon-Gonen dismissed the argument of the Ministry of Finance and the Israel Tax Authority that the information requested was privileged under the Income Tax Code with regard to both public and private companies. She said that the information requested was not confidential and that the authorities could not refuse to provide it by relying exclusively on the confidentiality provisions of the Tax Code.
"Globes" was represented by Adv. Yoram Muszkat and Adv. Orian Eshkoli.
Judge Agmon-Gonen ruled that, within seven days, the Ministry of Finance and the Tax Authority must hand over to "Globes" information about the companies that received tax breaks under the Law for the Encouragement of Capital Investment in 2006-12, and the identity of the ten companies that received the largest tax breaks in each year, including the amount of the tax break.
Judge Agmon-Gonen wrote that she was aware that this was a tight deadline for delivering the information, but said, "The respondents have been aware of the demand for a long time, and the timing of the delivery of the information is important. The court's ruling was also given within seven days."
Among the companies that the ruling covers are some of Israel's largest, including Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), Israel Chemicals Ltd. (TASE: ICL), Check Point Software Technologies Ltd. (Nasdaq: CHKP), Iscar Ltd., and Intel Israel Ltd., about which there have already been reports on their tax breaks under the Law for the Encouragement of Capital Investments (against the backdrop of public criticism of the tax breaks that the Israeli government awards leading multinationals).
Judge Agmon-Gonen opened the 28-page ruling opens with a quote from 1597 from English philosopher and statesman Sir Francis Bacon, "Knowledge is power." She went on to analyze the law and relevant precedents for the petition, with an emphasis importnace to the public and to democracy of disclosure of the requested information, the importance of the immediate delivery of the information, given the debate on the state budget, and the importance of the role of the press in putting issues onto the public agenda at the relevant time.
"At the center of the case in favor of delivery of the requested information is the public interest in knowing. The information of which disclosure is sought is public information in the clearest sense, since the tax breaks awarded under the Law for the Encouragement of Capital Investment originate in public money that is awarded annually by administrative decisions, and which the Tax Authority distributes as the public's emissary," Judge Agmon-Gonen states.
Public property
Judge Agmon-Gonen defined the information which "Globes" petitioned to be disclosed as "public property in the full sense of the term". She said, "Every Israeli citizen has the right to know the amount of tax breaks awarded under the Law for the Encouragement of Capital Investment to leading companies in the economy, when these tax breaks, which exceeded NIS 5 billion in 2010, affect the state budget and come at the expense of the public."
Judge Agmon-Gonen said that a company which seeks a tax break under the Law for the Encouragement of Capital Investments at the expense of the state budget, puts itself in the public or quasi-public sphere, which requires the publication of the information on the tax breaks. "It is right and proper that public money is not distributed in the dark under the Law for the Encouragement of Capital Investment, and there can be no doubt that there is great public interest in the possibility of the public examining and overseeing the process of granting tax breaks," she said.
The judge said that it was most important that the information requested by "Globes" should reach the public at this time, during the discussions on the deficit and the state budget "and when the state budget is in the eye of a public storm."
Judge Agmon-Gonen emphasized in her decision the tight connection between the right to information and the exercise of the press's freedom of expression. She said that there was another point supporting the delivery of the information to "Globes": "Entities such as the petitioners, journalists and the media, are a vital means of realizing freedom of expression and exercising the public's ability to criticize the action of the government and of contributing to the existence of an enlightened culture of government. The contribution of such entities and people to the shaping of society is greatly dependent on their ability to exercise the right to information," she said.
Judge Agmon-Gonen noted the educational effect of exposure to information, saying that publication of the information would improve the Tax Authority's functioning, both in view of broader public criticism that it would make possible, and in view of the incentive it would give the Tax Authority to criticize itself and improve its performance. "The publication of this information will strengthen the Tax Authority's credibility in the eyes of the public, in that it will serve as evidence that when the Tax Authority draws up the state budget and decides how it will distribute the public pie, a process in which political, economic, and diplomatic considerations are involved, it considers all the relevant rights and interests."
Judge Agmon-Gonen was unsparing in her criticism of the Ministry of Finance and the Tax Authority, saying that their refusal to hand over the information about the companies which received tax breaks under the Law for the Encouragement of Capital Investments had no legal basis. She said, "The arguments raised in the hearings before me indicate that the respondents only considered the companies' rights to privacy, and did not consider at all the public interest in the information." p>Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2013
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