Bill Seeking to Exempt Home Buyers From VAT Passes First Knesset Vote

The Knesset’s legal adviser warns the legislation does not meet the constitutional standards of equality.

Real estate properties in Tel Aviv.
Ofer Vaknin

The government’s proposal to exempt many home buyers from paying value-added tax passed the first of three votes in the Knesset on Monday, as the Knesset’s legal adviser warned the legislation is legally problematic.

Lawmakers voted 31-18, with one abstention, to back the law.

Finance Minster Yair Lapid, its main supporter, spoke in its defense.

“I’m opposed in principle to differential VAT rates, but the real estate market isn’t normal,” Lapid said about the plan, which would exempt certain categories of people from the 18% tax when they buy a new home.

But Eyal Yinon, the Knesset’s legal adviser, said the legislation does not meet the constitutional standards of equality, “especially in consideration that the bill seeks to deal with the problem of high home prices in Israel, which isn’t a problem specific to any one particular segment of the population.”

Under the proposal, Israelis who have done military or civilian national service would be entitled to a bigger benefit than those who have not.