Annual claims for income taxes and VAT from the prostitution industry in Israel total about NIS 1 billion, Israel Tax Authority director Eitan Rub told the Parliamentary Inquiry Committee on the Trading in Women today. He was quoting estimates by Tax Authority deputy in charge of investigations and intelligence Zohar Yom Tov and police officials.
The assessment is based on an average of NIS 2.2 million per escort service or massage parlor used as a cover for prostitution, each employing 15 women, and an estimate of 500 such businesses spread around Israel.
Rub added that the estimate was calculated according to the results of a sample of 150 joint raids by the police, the Tax Authority, and the Israel Money Laundering Prohibition Authority. The sample is being used as a tool for mapping organized crime families. Trafficking in women, which is classified as the most serious type of crime, accounts for a considerable proportion of large crime gangs’ business. Smuggling women from overseas has recently increased, both through the Sinai desert and through marinas on yachts.
The Parliamentary Inquiry Committee summoned Rub to explain why taxes should be collected from traffickers in women, when taxation could in effect legitimize this criminal activity.
Rub answered that even if tax collection appeared to the public as a legitimatization of crime, it was legally justified.
He added that the authorities combating organized crime had jointly reached the conclusion that the economic aspect of the struggle should not only be integrated with the criminal aspect, but that it was more important, since striking at its economic infrastructure would undermine organized crime’s existing infrastructure.
Published by Globes [online] - www.globes.co.il - on January 18, 2005