May 23, 2003

JERUSALEM - Help is needed from members of the U.S. Congress to contact U.S. State Department and Israeli government officials urging them to advise the State of Israel to drop a court case that would enable them to collect an employer's tax from Augusta Victoria Hospital, said Craig Kippels, Lutheran World Federation (LWF) representative here. The hospital, located on the Mount of Olives in occupied East Jerusalem, has been operated by the LWF for more than 50 years.

Kippels met May 23 with the Rev. Mark S. Hanson, presiding bishop of the Evangelical Lutheran Church in America (ELCA), who is visiting the Holy Land as part of an eight-member ELCA delegation. Hanson is also an LWF vice president.

The LWF is a global communion of 136 Lutheran churches, including the ELCA. It is based in Geneva, Switzerland.

In December 2002, an Israeli district court ruled that Augusta Victoria - a hospital that serves mostly Palestinian refugees - had a valid tax agreement that exempted it from the employer's tax since 1967. However, it also ruled that the State of Israel notified LWF that the agreement was to be terminated in mid-2000, Kippels said. If LWF accepted the decision, it would be liable for employer's taxes since 2001, he said.

The institutional tax would cost the hospital about $350,000 annually, or about 13 percent of its annual payroll, Kippels said. LWF has appealed the Israeli district court decision.

If Augusta Victoria must pay the tax, "it jeopardizes some if not all of what we do," Kippels said. "We don't have another $350,000," he said, adding that if the court decision stands, the hospital may be liable for about $1 million in back taxes.

Hospital employees pay income taxes and national insurance taxes already, Kippels said. LWF receives no subsidy from the State of Israel, he said.

"This is not an economic issue. This is a political issue," Kippels said. Without the help of members of the U.S. Congress and others in the U.S. government, Kippels said he doesn't believe the case against the hospital will be dropped.

In addition to Augusta Victoria, there are four other humanitarian organizations involved in similar court cases, Kippels said. The case has implications for churches and all other humanitarian organizations trying to serve here, he said.

The hospital is of great interest to the Israelis because it increases the Palestinian presence in East Jerusalem and because it is located on several acres of prime real estate, Kippels said. It serves about 15,000 Palestinian patients a year, with both in- and outpatient services, he said. About 200 of the hospital's employees are Palestinian, Kippels added.

The case is of "great interest" at high levels within the U.S. State Department because it involves humanitarian issues, said the Rev. Mark B. Brown, assistant director, Lutheran Office for Governmental Affairs, Washington, D.C. Still, he said, the church "needs a concentrated effort" on the Augusta Victoria situation. Brown and Kippels will travel to Geneva next week for consultations about how the LWF will respond to the State of Israel in the tax case.

Hanson said he sees the case as a "link issue" - one in which ELCA members can learn more about the hospital and the deeper issues within the Middle East region.

With Hanson on the trip are his wife, Ione Hanson; the Rev. Said R. Ailabouni, director for Europe and the Middle East desk, ELCA Division for Global Mission, Chicago; Brown; the Rev. Stephen P. Bouman, bishop of the ELCA Metropolitan New York Synod; the Rev. Floyd M. Schoenhals, bishop of the ELCA Arkansas-Oklahoma Synod, Tulsa; his wife, Betty Schoenhals; and John R. Brooks, director for news and media production, ELCA Department for Communication, Chicago.

ELCA News Service