Judge Tells Parties in LWF Hospital Case to Settle

JERUSALEM (ELCA) -- An Israeli judge overseeing a controversial tax case involving Augusta Victoria Hospital, the State of Israel and the Jerusalem tax auditor has told the parties to try to settle the case out of court. Augusta Victoria Hospital, operated by the Lutheran World Federation (LWF), is facing the possibility of paying $4 million in back taxes, interest and penalties, plus annual taxes of about $350,000, should it lose the case.
The hospital is located here on the Mount of Olives. It is open to all people, but most of its patients are Palestinians. The LWF, based in Geneva, Switzerland, is a global communion of 133 churches representing 60.5 million Lutherans. The Evangelical Lutheran Church in America (ELCA), based in Chicago, is a member of the LWF.
Presently, the hospital has beds for up to 100 patients, said Tawfiq Nasser, Augusta Victoria's chief executive officer.
The hospital's annual budget is about $6 million, of which it generates as much as $4 million. The rest, plus emergency aid support needed because of the current armed conflict, is provided by churches, humanitarian organizations and individuals, said Craig Kippels, LWF representative in Jerusalem.
The tax case was heard in the Israeli court Nov. 25. The judge gave the parties in the case until March 5 to determine a solution before a ruling, Kippels said. The judge also left open the possibility of granting additional time if needed, he said.
The judge's suggestion is not a victory for either side in the case, but there is an opportunity to work out an agreement, Kippels said.
In 1967, the State of Israel agreed in writing not to impose taxes on Augusta Victoria Hospital, the same exemption the hospital had under Jordanian rule. The exemption, which later included an employer's tax, has been honored since. Recently, Israeli tax authorities have questioned the agreement, noting that a 1975 law granted sole authority to grant exemptions to the Knesset, the house of representatives of Israel, Kippels explained.
The possibility of losing the tax case looms large for the 50- year-old hospital, he said.
"This would just be devastating to our programs," he said in an interview. "We would have to look at what services we could continue and what services we couldn't continue. Clearly, we would end up reducing overall services or closing certain programs."
The LWF is working on the situation, and, in the United States, the ELCA is working through the Lutheran Office for Governmental Affairs (LOGA), its federal public policy office in Washington, D.C. People concerned about the case could help by contacting members of Congress, the U.S. State Department or work through other diplomatic channels to communicate with the Israeli government, Kippels said.
"This is not something that is an acceptable tax particularly for a humanitarian organization such as the Lutheran World Federation, which is providing services primarily to refugees who are need of health care and education," he added. -- -- --
A video news story on the Augusta Victoria tax case can be found at http://www.elca.org/co/news/video.index.html on the Web.

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