wfn.org | Judge Tells Parties in LWF Hospital Case to Settle

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ELCA NEWS SERVICE

December 7, 2001

JUDGE TELLS PARTIES IN LWF HOSPITAL CASE TO SETTLE
01-316-JB

     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 administrator and chief operating
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, chief
executive officer and LWF representative.
     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.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html