Amid Student Protest, Government Tries to Sneak Through New Tax on College Scholarships

Revelation of Economic Arrangements Bill clause comes as thousands of students protest controversial bill calling for resumption in allowances to full-time yeshiva students.

Kadima yesterday exposed an apparent plan hidden in the Economic Arrangements Bill that would impose a tax on academic scholarships, amid student protests over a bill that would reinstitute income stipends for yeshiva students.

The treasury proposes taxing student and researcher scholarships of more than NIS 90,000 if they are granted by bodies outside the university. The tax would not apply to funds awarded by the educational institutions themselves.

Student demonstration in Jerusalem Nov. 1, 2010 (Emil Salman)
Emil Salman

Kadima castigated Prime Minister Benjamin Netanyahu's government over the clause. "Another bluff Netanyahu tried to hide is blowing up in the Israeli public's face," the party said.

"Netanyahu is lying again and is laughing in the students' faces. Only a cynical and obtuse government could issue such a cruel sanction against the student public," Kadima said, adding that Netanyahu's cabinet was "heartless, even toward those who represent Israel's future."

Kadima MK Yohanan Plesner, in a letter to Netanyahu, asked the premier to "come to your senses and cancel this cruel action immediately. The decision could hurt those living in the periphery and the chances of young men, including Israel Defense Forces veterans, to acquire a higher education in Israel."

The proposed tax came to light yesterday as thousands of students were marching in Jerusalem to protest a controversial bill that would return income allowances to full-time yeshiva students.

The bill has not passed, but the state budget bill includes a clause to fund it anyway. A week ago, after the yeshiva bill created a public outcry, Prime Minister Benjamin Netanyahu appointed a committee to discuss the matter. However, the budget that the Knesset approved last week contains NIS 111 million to fund the bill.

MK Moshe Gafni (United Torah Judaism ) who sponsored the yeshiva bill, said college and university students receive NIS 450 million in scholarships annually.

Student Union chairman Itzik Shmueli said hundreds of thousands of students would be harmed by the new tax.

Meretz faction chairman MK Ilan Ghilon said, "With one hand the government showers the ultra-Orthodox students with funds while the other is emptying the students' pockets."

The Prime Minister's Bureau said, "The opposite is true. Netanyahu's government drafted a bill exempting student scholarships from tax. Kadima is picking on a triviality by claiming that a clause ... taxes scholarships. That's the income tax officials' call and the prime minister has instructed a review of whether this is necessary."

Or Kashti contributed to this story.