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.

An amendment to the Income Tax Act that gives tax benefits to several communities, not one of which is Arab, is discriminatory and therefore unconstitutional, the High Court of Justice ruled on Wednesday.
The decision came in response to petitions against Amendment 146 that were submitted by the Association for Civil Rights in Israel and Adalah – The Legal Center for Arab Minority Rights in Israel in 2005.
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The court said the state should, in the context of its 2011-2012 fiscal legislation, change the legislation to eliminate discriminatory elements.
The court gave the state two months to initiate the process and ordered it to report its progress by November 30.
Amendment 146 originally gave tax exemptions to communities located on the border with the Gaza Strip, but the list quickly expanded to include more communities . The petitioners claimed that the provision of significant tax breaks to communities without clear criteria violates 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.”
Adalah attorney Sawsan Zaher said, “This ruling is very important for the advancement of socioeconomic 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 Beduin communities in the Negev.
“This is not the first time that the High Court has ruled against the discrimination against 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,” Zaher said.
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 socioeconomic 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 that elucidates to the cabinet that the amendment to the act is unconstitutional and it must be amended or canceled altogether.”