U.s.-israel Tourism Accord May Be Thwarted by Israel’s Stiff Travel Tax

Israel’s stiff travel tax, a subject of heated debate among Israelis, may thwart a U.S.-Israel tourism agreement expected to be signed when Vice President George Bush visits here next week.

Tourism Minister Avraham Sharir confirmed in an interview Wednesday that Washington is pressing Israel to repeal the tax on grounds that it undermined the reciprocity inherent in the agreement. Sharir has called the tax “idiotic” and counter-productive. But Finance Minister Moshe Nissim says he would be prepared to raise it if the Knesset Finance Committee called for an increase.

The travel tax, a feature of the austerity economic program, was instituted more than a year ago to raise revenue and help preserve Israel’s dwindling foreign currency reserves. At present it amounts to $120 per capita for Israelis travelling abroad, plus a 20 percent surcharge on their airline tickets.

Last summer, the tax was set at $300 in the peak travel months and an estimated 250,000 Israelis were deterred from vacationing abroad. Sharir denounced the tax, maintaining that the revenue raised was more than offset by the reduction of tourism to Israel. That was because airlines, which “want their planes full in both directions,” cut service to Israel, he explained.

The Finance Ministry, on the other hand, thinks the tax should be increased because many Israeli travellers avoid paying the 20 percent surcharge. They do so by having their airline tickets purchased for them abroad. The Ministry believes the surcharge should be abolished and the tax, which is unavoidable, raised.

Sharir stressed the importance of a tourism accord with the U.S. and wants nothing to stand in its way. He cited the 40 percent drop in American tourism to Israel so far this year because of the terrorist scare. He said there are signs of a possible improvement later in the year.

Another agreement that Bush hopes will be wrapped up during his visit concerns the Israeli-Egyptian border dispute over Taba.

The two countries have been deadlocked over the terms of reference for the arbitration panel which is to resolve the issue and have been unable to agree on the third member of the panel who will be from outside the region.

Israel has accused the Egyptians of foot-dragging over the procedures that have to be completed before an arbitration document is signed. U.S. State Department lawyers and cartographers have arrived in the area to join a measuring and map-making expedition to the disputed site on the Red Sea near Eilat. But Egypt has not yet indicated it is ready for that procedure.