The Taxman Cometh

Sigh, it’s that time of year again: tax time. (Actually, because I claim self-employment income as a freelance writer, I get a couple months breathing room here in Canada.) Apparently, that could mean some unexpectedly high tax bills for the 75% of kibbutzim that have voted to become mitkhadesh (aka, “innovating” or “privatized”) rather than stay fully communal, according to a news article in today’s Ha’aretz—upwards of 200 to 250 million shekels all together. (I just did the conversion: that’s roughly 54 to 68 million U.S.) Here are details:

Starting in 2009, the kibbutzim were required to attach a statement detailing their financial management to their annual reports. Any kibbutz reporting its management met the description of a privatized kibbutz would then be taxed as such, and not as a collective. Taxes for a collective are calculated after dividing the income among all the members. Kibbutzim that did not pay taxes when operating collectively may be required to pay a pretty sum once privatized, a financial official from the kibbutz movement said.

It reminds me of stories I heard from kibbutzniks related to the debate about privatization. Before the big vote, many members get enticed by the estimates and prospects of more money in their pockets. After privatization goes through, they are less thrilled when that same money quickly disappears to pay for the various services (e.g., meals at the dining hall, electricity, upkeep, laundry, etc.) that were once provided for gratis by the kibbutz but that members—like the rest of us—now have to pay for out of their own budgets.

I wonder how many privatized kibbutzim will have second thoughts about the shinui (aka, The Change) when they get their tax bills this year. Maybe I could offer some tips on creative tax write-offs!  🙂