Israelis Demonstrate Opposition to Tax Inspection of Bank Accounts

The Finance Ministry announcement that income tax authorities would exercise their right to examine bank accounts in search for tax evaders evoked sharp negative reactions today in Israel’s financial markets, including a sharp drop in Stock Exchange prices.

Other responses included a rise in “black market” dollar transactions and in gold and some refusals to accept checks. A number of depositors even closed out their accounts but generally, officials declined to view the reactions as a “rush” to avoid tax examinations.

The projected ending of banking transactions secrecy was condemned by most financial spokesmen who said there would be additional adverse reactions to the announcement. However, they also argued that the situation would return to normal when it became apparent that the tax officials intended to use their right in only a few cases.