1. Negative incentive: Levying high tax on fuel. Positive Incentive:  Tax benefits for investments in areas of national priority.  Tax benefits for employers / workers in priority jobs / sectors.  Tax benefits for employers / workers in areas of national priority. Examples for government incentives through taxation

2.  Negative income tax grant A grant provided through the Tax Authority to employees or self employed persons with low income level (increases the rate of participation in the labor market, focusing on families with children and adults over 55). Applying for a grant does not require payment and can be submitted at any post office.  Encouragement laws Tax benefits and grants provided by the government under the encouragement laws (Capital Investment Encouragement Law, Industry Encouragement law (Taxes). Goal: To encourage economic initiative and capital investment from Israel and abroad, develop industrial production capabilities, improve export and the balance of payments and spread population throughout the country.  Protecting local production - through customs and import surcharges. Considerations: Economic, social, security related and demographic. for example, preserving a certain level of agriculture.  Important: It is necessary to ensure that the protection is proportionate and balances local production with competition from overseas export. Examples for government incentives through taxation

3. 3 1.The Tax Authority was established on September 2004 and includes three of the departments that operated separately in the past-  The Department of Income Tax and Land Taxation [including property tax].  The Department of Customs and VAT.  EPS (Electronic Processing Services). 2.The Tax Authority has 5,300 employees (3,000 in Income Tax, 2,000 in Customs and VAT and 300 in EPS). What is the Tax Authority

4. 4 Units of the Tax Authority From the former Income Tax Department:  26 regional assessment offices  10 regional land taxation offices  4 regional investigation offices  3 regional execution proceedings units  1 national serious crime unit From the former Customs and VAT Department:  17 VAT stations  7 customs houses  4 investigation and intelligence units  1 headquarters unit for the prevention of drug smuggling and money laundering  9 international land border crossings and 8 internal crossings (demarcation line)  1 national unit for autonomy and fuel  3 overseas offices (Brussel, New York, Beijing)

5. The Vision of the Tax Authority The Tax Authority shall act diligently to enforce the collection of taxes and provide efficient, competent and fair service, while empowering human capital and promoting the duty and social value of paying true taxes.

6. 6 Goals of the Organization To establish an adequate tax policy to allow collection of true taxes and support economic activity. To promote a policy of growth and to narrow gaps while dealing withthe economic situation. To implement policies effectively while providing available and competent service to tax payers, citizens and foreign investors on the one hand, and establishing effective methods of enforcement and deterrence on the other. To improve the effectiveness of the work and to nurture employees.

7. Types of Tax and Means of Levying Tax Direct Taxes - taxes that are levied on the income, property and wealth of a tax paying citizen in accordance with his ability to pay. Indirect taxes - taxes that are levied on the expenses of a tax paying citizen, Direct Taxes - taxes that are levied on the income, property and wealth of a tax paying citizen in accordance with his ability to pay. Indirect taxes - taxes that are levied on the expenses of a tax paying citizen, Tax types Relative tax - a fixed rate tax with no relation to income level or amount of property or expenses. Progressive tax - a graded rate tax in which the percentage of tax increases as the income, property or expenses increase. Regressive tax - same as the above but in reverse. The percentage of tax decreases as the income, property or expenses decrease. Relative tax - a fixed rate tax with no relation to income level or amount of property or expenses. Progressive tax - a graded rate tax in which the percentage of tax increases as the income, property or expenses increase. Regressive tax - same as the above but in reverse. The percentage of tax decreases as the income, property or expenses decrease. Means of levying taxes 7

8. 6. Direct / Indirect Taxes Example The role of the teacher What are the characteristics of an indirect tax? What are the characteristics of a direct tax? Which of the two is more fair in your opinion and why?

9. 6. The Difference between a Relative Tax and a Progressive Tax Example What is the difference between a relative tax and a progressive tax in light of the 3 types of revenue?