Bills Granting Tax Breaks to Israeli Settlers Pass First Knesset Readings

Zionist Union MK Merav Michaeli: This is creeping annexation and encouragement of investment in settlements.

A laborer stands on an apartment building under construction in a Jewish settlement known to Israelis as Har Homa and to Palestinians as Jabal Abu Ghneim, October 28, 2014.

Two bills that would grant economic benefits to settlement residents passed their first readings in the Knesset Tuesday morning. The first would introduce a new tax payment mechanism for purchasers of homes in settlements, enabling them to avoid dual payment to the Civil Administration and the Income Tax Authority. The second bill enables settlers to obtain the same tax breaks given within the Green Line for profits earned in the territories.

The first bill is meant to ease the bureaucracy currently involved in home purchases in settlements and prevent settlers from paying a double tax to the state and to the Civil Administration. Currently, Israeli citizens who wish to purchase assets over the Green Line must pay a mandatory fee to the Civil Administration as well as a purchase tax to the state.

The bill says that the fee paid to the regional authority will be deducted from the tax to the state. But in most cases, the purchase tax is paid to the state before the fee is paid, and so the refund is only given after the citizen has first made the two payments out of pocket. Only after he has paid twice can he request the refund from the state tax authorities. The bill proposes an upgraded payment mechanism in which the Land Tax Authority will relay the payments to the Civil Administration so that double taxation is prevented.

During the Knesset session, Meretz MK Esawi Freige criticized the decision. “The purpose of the bill is to make it easier for purchasers of land in the West Bank and Gaza. To put it bluntly, this is creeping annexation and they’re all collaborating with this annexation, each in his own way.”

The second bill says that settlers who are eligible for a grant promoting capital investment due to profits earned in the territories will now also be entitled to the tax breaks given within the Green Line according to Israeli law. Currently, an Income Tax Authority rule says that income produced in the territories is subject to the same taxation as within the Green Line. But the laws to encourage capital investment and capital investment in agriculture do not grant authority to give benefits and grants to residents of the settlements, in accordance with an administrative arrangement set by government decisions. Freige also protested this bill. “Instead of promoting Bnei Brak, they’re promoting Elon Moreh,” he said.

“At a time when the world is ostracizing and boycotting the settlements and their products, the State of Israel is encouraging investment in the settlements,” Zionist Union chairperson Merav Michaeli said. “The Netanyahu government is putting [Habayit Hayehudi leader Naftali] Bennett’s ideology into action and applying creeping annexation in the territories. The damage Netanyahu is doing to Israel in the world will take years to repair.”