Originally created 03/10/99

Y2K planning disrupts Israeli tax services



JERUSALEM -- Israel's income tax collectors didn't wait for the Y2K bug to shut down their computers at the end of the year -- they inadvertently disrupted service a year early.

The glitch occured when they tried to bug-proof the computers of the Israel Tax Authorities, and thousands of grumbling taxpayers found themselves overpaying.

The mess at the tax office is an indication of the kinds of problems in store for Israelis -- and people worldwide -- as the millennium draws near.

Israel prides itself in being high-tech, but experts said Tuesday the country was not adequately prepared to tackle the Y2K problem -- the confusion created when computers programed to keep track of the year with only two digits don't know how to read the year 2000.

Israel's Finance Ministry has been coordinating efforts to prepare the nation's computers for 2000. However, overworked government clerks missed a June 1998 deadline to update the most critical computer systems, such as those in hospitals.

That led Prime Minister Benjamin Netanyahu to appoint his chief of staff, Moshe Leon, to supervise the effort. But critics still complain the work isn't being done quickly enough.

"It's a scandal that Israel does not have a national body to deal with the 2000 bug," legislator Alex Lubotsky, chairman of parliament's Science Committee, said, urging the Defense Ministry to take over and accelerate preparations.

Worldwide, countries have been racing against the clock to weed out millennium computer bugs, which could threaten airline safety, banking and even defense systems. American officials have said most industrialized nations are making progress but developing countries with scarce resources are further behind.

The trouble at Israel's tax office started Jan. 1, the beginning of Israel's fiscal year, when computer programs are routinely changed.

Government computer experts decided this would be a good time to develop a Y2K-proof program. But the new software was not ready on time -- creating chaos in tax offices, which no longer had programs for updating files or generating the tax-deduction forms critical to determining workers' take-home pay.

Without the tax-deduction forms, employers were required to deduct half of a worker's pay for income tax.

Understandably, that led to an outcry from taxpayers and tax collectors had no choice but to turn back the clock -- literally.

"Instructions were given to clerks to issue handwritten permits," said Sarit Giladi-Dor, spokeswoman for the Income Tax Authority.

For three months, copies of the scrawled forms have been piling up on the desks of 35 tax offices around the country, waiting to be entered into the computer. Tax advisers and accountants were often unable to even access their clients' files, said Jerusalem tax adviser Yitzhak Becker.

Now the end of "Bug 99" is in sight, but it's just the start of work for the clerks.

The Y2K-friendly program is being tried in four Israeli tax offices, and so far it apparently works. It is to be installed nationwide next week.