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The Underground Economy

An established and organized underground economy has developed among the Negev Bedouins. Hundreds and thousands of businesses know nothing about keeping books or paying taxes. They have never even heard about a cash register – actually, they have heard, but they’ve decided not to pay attention.

As simple citizens who want to make a living, we all know about the aggravation and bureaucracy required to open a simple family business. Whether it is a garage, a grocery store or service provider, it is necessary to go through a complicated and not inexpensive process of receiving a license. Building permits, business license, insurance forms, bookkeeping and taxpaying certificates, these are just some of the permits and documents that we must present before receiving a business license. How did we forget – paying a fee – and another fee … Being involved with bureaucracy is with us for the entire lifetime of the business – cash register, monthly reports to the tax authorities and VAT, one report after another, and of course, paying taxes, advance payments, estimated payments, back and forth, yearly fees to the companies registry and more.

Without a doubt, it’s not easy to make a living in the Jewish State – unless you are a Bedouin.

While millions of Israelis are groaning under the burden of the bureaucracy and set aside an appreciable part of their income to pay taxes, the residents of the scattered Bedouin settlements have easier lives. In order to open a business all that you need is the right location, some building materials and labor – and in a few days you have a flourishing and successful business. Among the Negev Bedouins, paperwork is completely superfluous. They obviously want to save the trees- that’s why they have found a way to work without forms or licenses. Taxes? Fees? What are those? Why should someone living in the Negev share his profits with the other citizens of Israel? Everyone who starts a business in Israel knows that if there is an authority that you don’t want to “start up with”, it’s the Tax Authority. The saying goes: “Whoever starts up with them is never finished.” Why is it that the brave men in the Tax Authority fall silent when it comes to tax fraud on an unprecedented scale in the Negev?

An established and organized underground economy has developed among the Negev Bedouins. Hundreds and thousands of businesses know nothing about keeping books or paying taxes. They have never even heard about a cash register – actually, they have heard, but they’ve decided not to pay attention. Why not? If there is no enforcement, why pay? If there are no inspections or investigations, why be a chump and give away half your profits?

The problem and economic damage to the state does not end with tax evasion. When a business is not registered, and neither are its profits, its owner is listed on the state records as one who does not make a living. In Israel’s welfare state, someone who doesn’t make a living is considered poor, and poor people receive welfare payments – significant payments. Understand?

We understand this and therefore the Regavim inspectors in the south decided to assist the authorities to do their job. Within days 77 sample businesses that operate illegally in the spread-out Bedouin settlements of the Negev were mapped out. Businesses were photographed, and their activities were documented in detail. The mapping was turned over to the tax authorities, VAT and National Insurance, along with close-up pictures and other data. Now, we naively thought, the authorities would make haste, raid the businesses, investigate, open files, collect taxes and close the unlicensed businesses.

Truth to be told, we believed that in this case, in contrast to illegal construction, that the authorities would actually take action. We thought that since we are speaking of money, a lot of money, the authorities would do what they are obligated to do and save the state and the Israeli taxpayers hundreds of millions of shekels every year. But here as well, to our great surprise, nothing has yet been done.  Months have gone by and our letters are still lying on the desks of the authorities – but no action has been taken.

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