Knesset members debate tax breaks for nongovernmental organizations

Palestinians don’t pay taxes to Israel, so NGOs should not get tax deductions on donations made to them, MK Bezalel Smotrich (Bayit Yehudi) argued Monday during a Knesset Finance Committee discussion on a bill he submitted to change the standard for tax breaks on nongovernmental organizations.

Smotrich’s proposal would allow only NGOs working for the good of Israeli citizens and Diaspora Jewry to receive the exemption; any organization working “against the state” or taking part in delegitimization efforts would not.

The bill is meant to target far-left organizations such as Breaking the Silence, which collects testimony from former IDF soldiers claiming war crimes, and B’Tselem, which advocates for Palestinian human rights. Both have testified against Israel in front of international organizations.

Finance Committee Moshe Gafni (UTJ) backed Smotrich’s idea to some extent, saying only “deeply controversial” organizations should lose their tax breaks.

“We are talking about the distribution of public resources, so it is appropriate that there should be a discussion in the Knesset. At the same time, we must make clear the division of authority between the Tax Authority and the Finance Committee,” Gafni said.

Currently, the Tax Authority gives the committee a list of NGOs and a yes-no vote is held on the list as a whole. The authority’s only standard for an organization to get on the list is that it be properly managed and follows the law. However, there have been cases in which the committee voted against an NGO for other reasons, as in July 2015, when Gafni accused a Christian organization of illegal missionary work.

Smotrich said his bill is necessary because “a normal country doesn’t help those who fight against it,” and that the elected MKs, not bureaucrats, should be the ones to decide the criteria.

“As a taxpayer, I’m not willing to fund those who help the residents of Gaza. The EU can fund them,” he added.

Opposition MKs, however, argued that Smotrich’s proposal violates freedom of expression and association.

Meretz chairwoman Zehava Gal-On said that tax exemptions for NGOs should not be decided according to a political agenda. Gal-On lamented that the Finance Committee had become a “rubber stamp.” She listed several right-wing and religious organizations that she feels should not get tax breaks, but still votes for them to receive them because they are part of a larger group getting voted on.

“This is a proposal meant for very specific organizations,” Gal-On said. “I think that settlers who go to the US to raise money are acting against the state’s interests. There are no civil society organizations acting against the state; they’re criticizing the government.”

MK Manuel Trajtenberg (Zionist Union) noted that “Israel society is varied... and still is not one nation. Therefore, we cannot always say what is the good of the state in a way that everyone agrees on.”

Tax Authority non-profits manager Erez Orad said the debate was totally political and that he wanted no part in it.

“I and the Tax Authority don’t want to play the part of the commissar. The Finance Committee asked me to investigate organizations more than once and I don’t think I should be doing that,” Orad said.

Gafni closed the meeting by saying he would seek consensus about what the criteria for NGO tax breaks and what the roles of the Tax Authority and Finance Committee should be on the matter.