Knesset Hopes to Keep Currency at Home : Israelis Glum, Angry Over Taxes on Overseas Travel

Arturo Eifer sat glumly behind his desk at the Israel General Bank. “Do you have any good news?” he asked a customer.

“What’s wrong?” the customer asked.

Eifer paused a second, not sure that he really wanted to discuss it, then grabbed for a pen and paper. “It’s this travel tax,” he said with agitation in his voice as he began to list all the various surcharges the Israeli government has slapped on overseas travel during the last few months.

The latest additions, formally approved by the Knesset (Parliament) Finance Committee on Wednesday, are a $150 travel tax and a 20% ticket tax that are expected to take effect next week. Based on the price of the cheapest round-trip air fare from Tel Aviv to New York, the changes will add 53% to the travel cost. For a trip to Cyprus, the cost will be almost double.

Perhaps more than any other austerity measure enacted by the national unity government, the travel and ticket taxes have angered and depressed Israelis.

This is still a country of immigrants and, like bank officer Eifer, with a mother in New York and the rest of his family in South America, many Israelis have relatives abroad. Visiting those relatives is one of the reasons Israelis are among the world’s most frequent travelers--one out of five went abroad last year despite a 7% drop in foreign travel because of the country’s economic crisis.

According to Yisrael Baron, the nation’s revenue commissioner, the government expects the new taxes to cut the number of travelers by 15% and to reduce the amount of money Israelis spend abroad by $130 million.

Its goal is to slow the continuing decline of Israel’s vital reserves of foreign currency, which fell by $282 million last month alone. The drop since last Nov. 1 has wiped out three-quarters of the $1.2 billion in U.S. aid Israel received on that date.

Israel’s shrinking foreign currency reserves are now seen as its most pressing economic problem--and the reason it is seeking an additional $800 million in U.S. emergency aid between now and next October. Without that money, some economists contend, Israel’s reserves will disappear, precipitating a full-fledged credit crisis and possibly even economic collapse.

But Israelis hit by the new travel tax are not impressed by high-sounding economic arguments.

Angry Letters

“With one fell swoop, the government has wiped out all my chances of a deserved and enjoyable vacation abroad,” Yisrael Baer Ben-David wrote to the Jerusalem Post newspaper the other day. “Instead, they want my money to help pay for their mistakes.”

Another angry letter writer was Robert Kleiman, who argued that immigrants should at least be able to take one tax-free trip home every year. “It was our choice to (immigrate) and to leave our families,” Kleiman wrote. “We chose to make all the sacrifices and adjustments. We did not choose to become cut off from our families and we certainly do not choose to become prisoners in Zion.”

The head of the immigration department of the Jewish Agency and other concerned officials warn that the taxes will discourage Jews from moving here, undermining Israel’s reason for existing.

Teresa Amiel, a busy working mother of two young sons, does not try to glorify her reasons for opposing the travel taxes. “It’s so difficult to live in this country--one has to leave to breathe a little bit,” she said.

There is still one opportunity for low-cost foreign travel, Meni Peeir, an Israeli television comic in the Johnny Carson mold, noted the other night. For the next few months at least, Israeli army reservists can go to Lebanon for free.