Does Netanyahu Owe 1 Million Shekels in Taxes? AG Has Yet to Decide After Yearlong Probe

Israel's attorney general is asking for another extension

Prime Minster Benjamin Netanyahu speaks at a Likud faction meeting at the Knesset, May 29, 2017.
Olivier Fitoussi

Attorney General Avichai Mendelblit has asked the High Court of Justice for another two-month extension before deciding whether Prime Minister Benjamin Netanyahu is subject to taxes for the public funding he receives for improving or preserving the value of his private residences including maintenance, repairs and cleaning.

The extension puts the period Mendelblit has devoted to the issue at over one year.

According to a petition filed with the High Court, based on official figures, the taxes Netanyahu would have to pay if ordered to do so would reach 1 million shekels ($282,000). So far these expenses have not been taxed and neither the courts nor the tax authorities have moved to collect such funds.

Justice Neal Hendel, who received the attorney general’s request, will decide on Sunday whether to accept it. The petition, filed by attorney Shachar Ben-Meir, will be heard by a panel of three judges.

Mendelblit was first faced with the issue in June 2016, but has not yet formed an opinion on the matter, even though the State Prosecutor’s Office says a legal brief was delivered to him in February. The attorney general wants this extension, after receiving an earlier one in April, claiming that the “issue is now under discussion at the highest levels” that include Netanyahu, Mendelblit, the tax authorities and the accounting chief at the Prime Minister’s Office.

Ben-Meir asks that taxes on the funding Netanyahu has received for these expenses be deducted from Netanyahu’s paycheck, continuing to the end of his term. According to the plaintiff’s estimate, based on official data, Netanyahu receives 250,000 shekels a year from the state for expenses at his private homes. In the eight years he has been prime minister he has received 2 million shekels. Taxes in his income bracket amount to 50 percent, putting the unpaid taxes at 1 million shekels.

The Netanyahu family’s home in Caesarea.
Itzik Ben Malki

Ben-Meir’s estimates jibes with figures in a state comptroller report from 2015 that dealt with the years 2009 to 2013. The state’s expenses on Netanyahu’s home in Caesarea, in which he lives one day a week, reached 985,000 shekels in the final four years of this period, or 246,000 shekels a year.

The amount in 2009 is unknown since the expenses were not separated from those pertaining to the official residence in Jerusalem. The comptroller’s report noted, for example, that cleaning expenses alone amounted to 8,000 shekels a month.

Only now, 11 months after Ben-Meir first approached him, has Mendelblit said he needs extra time because “in the course of these discussions we are considering a much broader examination of these issues, which will include this specific case.” The attorney general does not explain his delay so far and why he is looking at the broader issue only now, trying to take the focus off Netanyahu.

Ben-Meir told the High Court he objected to the extension after the court rejected a request for a three-month extension last April, granting Mendelblit only two months. These are “unacceptable excuses” wrote Ben-Meir.

“The attorney general is also subject to court decisions,” he wrote. “The extension is only meant to avoid discussion of the petition, which claims that the prime minister is not paying taxes like everyone else for a benefit he receives from the state. A fifth extension will only be an evasion of a response, only because this is the prime minister.”

Ben-Meir approached Mendelblit after the comptroller’s report on the public financing of Netanyahu’s private homes came out – these included the house in Caesarea and an apartment on Gaza Street in Jerusalem. These expenses were meant to preserve the value of these houses, according to the report, unconnected to expenses associated with using the house as part of the prime minister’s official duties.

Before turning to the attorney general, Ben-Meir asked the legal counsel at the Prime Minister’s Office if these benefits of “preserving value” were being taxed. She referred him to the office’s general accountant and to the Finance Ministry’s accountant general at the time, Michal Abadi-Boiangiu, who is now a contender to become civil service commissioner. The two did not provide any answer.

Ben-Meir noted that taxation or exemption from taxation requires legislation, and that the current law does not exempt such expenses.

He said that even if the attorney general ignored the need to refer to legislation and relied on prior decisions by the Knesset Finance Committee, a 2006 decision during Ehud Olmert’s premiership exempted only a few specific expenses.

One such exemption was for 45,000 shekels a year for clothing for the prime minister and his wife, implying that other expenses were taxable. A personal exemption for expenses that are unrelated to the prime minister’s public duties would impinge on the principle of equality, Ben-Meir argued.

This issue had already been discussed by state agencies. Netanyahu, respondent number one in this petition, has not responded to it. Mendelblit’s request for an extension is signed by attorney Hilla Beja-Dolinsky, an assistant to the state prosecutor.