Editorial

Revoke the 'Milchan Law' That Buoys Billionaires

Israel is turning itself into one of the world’s most valuable tax shelters, putting it on the same footing with countries like Bermuda and Panama

Reuters

The so-called Milchan law grants extensive benefits to a handful of Jewish billionaires, tycoons and oligarchs. The law, which was passed in 2008 by Ehud Olmert’s government, exempts new immigrants and returning Israelis  from taxes on profits earned abroad for 10 years, including an exemption from reporting the profits. There’s even an option to extend the exemption to 20 years in return for significant investment in Israel.

The law is therefore designed to encourage Jewish billionaires to move to Israel via the temptation of obtaining a tax exemption. The cost of this exemption is also paid by the citizens of countries where billionaires no longer have to pay taxes, and the citizens of Israel, who don’t benefit from a tax on the billionaires’ income. Nor do Israelis benefit from the investment of those assets in Israel, because the tax exemption only applies as long as the investments remain abroad.

And so who benefits from the law? Of course that handful of billionaires who save on taxes for 10 years and enjoy the fog of not having to report for 10 years – a fog that gives them time to conceal their assets and profits. Thus Israel is turning itself into one of the world’s most valuable tax shelters, putting it on the same footing with countries like Bermuda and Panama, where the law allows tax evasion.

Israel is also turning itself into one of the world’s most discriminatory countries. The clause letting the exemption continue for 20 years creates clear discrimination between ordinary Israelis, whom the law requires to pay taxes, and wealthy Israelis, who even after living here 20 years will still be exempt. Only the worst countries in the world create such discrimination to benefit the wealthy, while the state gains nothing.

The Milchan law was passed by Olmert, but Benjamin Netanyahu’s governments are the ones that since 2009 have prevented this scandalous law from being taken off the books. According to the police’s suspicions, Netanyahu was actively involved in preventing the law from being revoked.

It seems it’s no coincidence that this corrupting and corrupt law is associated with two prime ministers, one who has already been convicted of criminal acts and the other who is now suspected of them. There’s no time like the present to revoke this warped piece of legislation.