High Court Orders Location-Based Tax Breaks to Be Discontinued

13 October 2010 By New Israel Fund

Israel’s High Court of Justice has ordered the Tax Authority to discontinue tax breaks based on location, which discriminated against Arab-Israeli towns and villages.  The ruling follows a petition by veteran NIF grantees Association for Civil Rights in Israel (ACRI) and Adalah: Legal Center for Arab Minority Rights in Israel.

The special tax breaks were originally introduced in 2005 for Israeli citizens living in towns and villages alongside the Gaza Strip who were under constant missile fire. Over the years, however, dozens more locations were added that benefited from special tax breaks, including West Bank settlements and Jewish towns and villages in peripheral and development regions.

In its ruling the panel of three judges said, “Amendment 146 to the Income Tax Act is unconstitutional because it bestows tax benefits to several communities without egalitarian, clear and written criteria; not one Arab community was deemed eligible for these exemptions.”