Israel Tax Authority chief quits amid scandal

JERUSALEM, Feb 19 (Reuters) Israeli Tax Commissioner Jacky Matza has resigned in the wake of an ongoing investigation into his involvement in a corruption scandal at the Tax Authority, the Finance Ministry said today.

Matza, who has been on a leave of absence for the past six weeks, submitted his letter of resignation to Finance Minister Abraham Hirchson late yesterday.

In the letter Matza wrote that he resigned out of public responsibility since he did not want to be an obstacle in preventing the appointment of a new tax chief.

Hirchson said he respected Matza's decision and thanked him for many years of service at the authority, the ministry said in a statement.

Former Finance Ministry Director-General Joseph Bachar has been acting as Tax Authority head and will continue to stay in the post until a permanent replacement is named.

In early January Israeli police arrested Matza and more than a dozen others -- including Prime Minister Ehud Olmert's executive secretary -- on suspicion of involvement in payoffs for tax breaks.

The investigation is still ongoing.

Olmert himself was not questioned or accused of any personal involvement but drew criticism about the functioning of his administration.

Matza had been briefly held under house arrest.

A spokeswoman for the Tax Authority said that Matza's resignation did not indicate he was guilty.

''He is still going to fight to clear his name and prove that he is not guilty,'' she said. ''He understood that this was the best course of action for the authority to get a new commissioner.'' REUTERS AKJ BD1630