The Association for Civil Rights in Israel petitioned the High Court of Justice yesterday with an urgent demand to cancel the "Tax Benefits for Residents of the Eastern Conflict Line Area Law (Temporary Provision), 5786–2026." The petition, which includes an urgent request for an interim injunction, claims that the law enacted in the midst of an election campaign fatally harms the right to equality, the rule of law, and the principle of the generality of legislation, and that it was effectively "tailored" to the dimensions of a predetermined group of beneficiaries deep within the West Bank.
"Tax benefits must be granted based on substantive, equal, and transparent criteria, and not through artificial mechanisms designed to achieve a predetermined political outcome," stated Atty. Michal Tajar of the Association for Civil Rights in Israel, who filed the petition. "This is election bribery disguised as legislation that harms the rule of law, the principle of equality, and public trust in the legislative process. Therefore, we demanded its cancellation."
Reverse Engineering of Criteria: A "Route Bypassing Equality"
The new law grants a tax credit at a rate of 7% of taxable income to residents of a "preferred eastern conflict line area locality." However, the petition reveals that the established criteria – including a distance of two kilometers from the fence and reliance on Ministry of Defense fortification requirements for student transportation only – are not based on professional staff work, but were designed via "reverse engineering" to fit a specific group of localities in advance.
According to the Association, the law creates a separate dedicated track based on ostensibly "security" criteria, but ones that were artificially tailored in order to exclude other groups suffering from no lesser security threats, such as northern localities that were under shelling throughout the entire period the law was being promoted. In this manner, it is claimed, the law generates a framework that encourages moving to the occupied territories through an economic benefit.
"Working Without an Infrastructure": Chaos in the Finance Committee and Silencing the Gatekeepers
The petition exposes protocols from the Finance Committee debates, which present absolute factual chaos and a sweeping disregard for the warnings of the gatekeepers. During the debates, the wording of the law was completely transformed – from a general "threat level" criterion to the technical criteria of distance and fortification. Committee members were required to vote without a final list of localities being placed before them and without a reliable budgetary picture being presented. The number of eligible localities jumped during the debates from "mere dozens" to 38, then to 59, and finally to 149 localities.
The legal advisor of the committee, Atty. Shlomit Ehrlich, warned committee members in writing in real time that the frequent wording changes and existing data "do not allow for an informed decision based on reliable information," and that this is a law that will "mark the target, contrary to precedent and ruling regarding tax benefits."
Representatives of the professional echelon in government ministries resolutely opposed the law. Atty. Liron Naim from the Ministry of Justice clarified during the debates: "We are working without an infrastructure, that is all." The representative of the Tax Authority, Natalia Miranchov, clarified that tax benefits are not the correct tool for dealing with a security threat: "When it comes to a security threat, there is basically no chance that those well-to-do people, who arrive and pay municipal property taxes, it does not assist the security consideration, and perhaps tax benefits are truly not the correct cure for the problem."
The height of the drama was recorded when the representative of the Budget Department in the Ministry of Finance, Elkana Riklin, attempted to present data and studies by the Bank of Israel and the Chief Economist, proving that the effectiveness of tax benefits as a tool for encouraging immigration is extremely limited, and that their cost is very high – at least NIS 339 thousand and 300 for every additional net immigrant for the first four years, when most of the money actually reaches long-time residents.
At that moment, the advisor to the Minister of Finance, Barak Rosenfeld, burst in and demanded to silence the Ministry of Finance representative, claiming that state employees are obligated to present solely the political position of the ministers: "In the government, there are regulations, the civil service regulations... the Ministerial Committee for Legislative Affairs supported the bill. The position of the Minister of Finance is to support the bill. So with all due respect, an internal discourse conducted within the government that the government did not adopt cannot arrive as an official position."
Following the explicit demand, the Tax Authority representative was forced to refrain from presenting the study data.
Immediately after the silencing of the professional echelon, the debate turned into open political negotiations over the scope of the benefit, when representatives of the Haredi parties (MK Yinon Azoulay of Shas and MK Moshe Gafni of United Torah Judaism) were surprised to discover that the artificial fortification criterion completely excluded the Haredi localities in the area.
The Deviation from the Equal Benefits Map
The petition details that the new law constitutes an extreme and manipulative deviation from the equal and comprehensive distribution mechanism established in Section 11 of the Income Tax Ordinance, which was enacted following the historic High Court of Justice ruling in the "Nasser" case (which canceled the selective benefit lists established in the past behind closed doors). While the other two exceptions existing in the law – the tax benefits for Gaza envelope localities (southern conflict line area) and the rehabilitation benefits for localities adjacent to the Tekuma region after the October 7 massacre – relied on comprehensive staff work, objective indices, and applied to a recognized border line, the current law was enacted under absolute factual chaos with the aim of legitimizing a prohibited sectorial and political preference on the eve of the elections.
Due to the immediate and retroactive application of the law (starting from January 1, 2026), and the grave concern over the use of the public purse for partisan needs and irreversible harm to the integrity of the elections, the Association for Civil Rights in Israel requests the Supreme Court to immediately halt the distribution of the benefit until a ruling on the petition is reached.