The Knesset Finance Committee approved an agreement with the Jewish National Fund that commits the JNF to make a one-time payment to the government of 1 billion shekels ($288 million) in 2018. In return, the organization will have its tax-exempt status confirmed through the end of 2020.
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The organization has not committed to making any payments to the government coffers in the two years after that. The agreement does, however, give the JNF, which is also known by its Hebrew name, Keren Hayemeth LeIsrael, the option of paying tax on its income beginning in 2018 instead of making the billion shekel payment. The necessary legislation confirming the arrangement is expected to be introduced for its final two Knesset votes Monday evening.
JNF owns 13% of the land in the country. The Zionist institution was founded in 1901 to acquire and develop land on behalf of the Jewish people in pre-state Israel. After the establishment of the state, it has continued its work with afforestation, the development of recreation areas and ecology projects, among others. It has fundraising affiliates in a number of Western countries that raise money to support projects in Israel and that are separate entities from JNF in Israel.
The terms of the agreement approved by the Knesset Finance Committee represent a compromise between the Finance Ministry and the opposition in the Knesset following the introduction of a bill that received the Knesset’s support in an initial vote that would have required the JNF to transfer a total of 2 billion shekels during the two-year period from 2018 through 2019 and to receive a tax exemption through 2023; or to pay tax on its profits on improvements to its land performed by the Israel Land Authority. In effect, the new agreement has the Finance Ministry foregoing the billion shekel payment that it had been demanding in 2019.
An earlier agreement in principle that the state and JNF had seemingly worked out was to have required the JNF to pay the state 1.8 billion shekels between 2018 and 2020, but after the agreement was reached, differences of opinion surfaced, and it was never signed, amid mutual recriminations. The Finance Ministry then announced that it would cease further contact with JNF and would instead unilaterally pursue the passage of Knesset legislation requiring the organization to transfer funds. The Finance Ministry was eager to have the legislation passed quickly to provide income to the state’s coffers that would ease Knesset debate over the 2019 budget.