Court rules Income Tax Act amendment discriminatory

After petitions by rights groups, Amendment 146, bestowing tax benefits to several communities, not one of which is Arab, ruled unconstitutional.

September 16, 2010 17:15
2 minute read.
Court rules Income Tax Act amendment discriminatory

high court 224.88. (photo credit: Ariel Jerozolimski [file])


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The High Court of Justice on Wednesday ruled that an amendment to the Income Tax Act which bestows tax benefits to several communities, not one of which is Arab, is discriminatory and therefore unconstitutional. The decision came after petitions against Amendment 146 were submitted by the human rights groups ACRI and Adalah in 2005.

The court's decision gave the State the opportunity to amend the act to eliminate discriminatory elements in the context of its 2011-2012 fiscal legislation. The court gave the State two months to initiate the process and ordered it to report its progress by November 30.

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The amendment originally bestowed tax exemptions to Israeli communities located on the border with the Gaza Strip, but the list quickly expanded to include additional communities . The petitioners claimed that the provision of significant tax rebates to communities without clear criteria is a violation of the right to equality, and pointed to the fact that not one of the communities enjoying the benefits is Arab.

In the ruling, the court wrote, "The government and the Knesset avoided - in a systematic and longstanding manner - the formulation of a solution to the issues outlined in the petitions; this was in direct contravention of the positions taken by representatives of the Attorney General."

According to Adalah Attorney Sawsan Zaher: "This ruling is very important for the advancement of socio-economic equality in Israel. The decision clearly states that the provision of tax benefits to certain communities is discriminatory because the cabinet did not consider principles of equality in formulating the criteria for receipt of these benefits, specifically to include Arab communities, which suffer from widespread poverty, especially the Bedouin communities in the Negev.

"This is not the first time that the High Court has ruled against the discrimination of Arab communities in the allocation of economic benefits; three years ago, the High Court ruled against the exclusion of Arab communities in the categorization of communities into national priority areas (which receive benefits), but the cabinet has refused to implement the ruling."

According to ACRI Attorney Auni Banna, "Amendment 146 is an attempt to anchor in law the provision of tax benefits to friends and allies, and not to those who truly need them. This state of affairs violates the basic principles of equality and fair administration, acutely harming the Arab communities whose socio-economic status is the worst among the communities in Israel. Following a long period in which the High Court exhibited exceptional patience toward the government, we welcome the court's decision which elucidates to the cabinet that the amendment to the act is unconstitutional and it must be amended or cancelled altogether."

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