September 15, 2010 – In response to petitions submitted by ACRI and Adalah, the High Court of Justice decided yesterday (September 15) that Amendment 146 to the Income Tax Act is unconstitutional because it bestows tax benefits to several communities without egalitarian, clear and written criteria; not one Arab community was deemed eligible for these exemptions.
The Court’s decision gave the State the opportunity to amend the Act to eliminate discriminatory elements in the context of its 2011-2012 fiscal legislation. The Court gave the State two months to initiate the process and ordered it to report to the Court on its progress by November 30.
In 2005, ACRI and Adalah petitioned the High Court separately against Amendment 146, a discriminatory clause determining the provision of income tax benefits. The amendment originally bestowed tax exemptions to Israeli communities located on the border with the Gaza Strip, but the list quickly expanded to include communities added for political reasons only. The petitioners claimed that the provision of significant tax rebates to communities without clear criteria is a violation of the right to equality, and pointed to the fact that not one of the communities enjoying the benefits is Arab. The amendment passed despite the fact that Arab communities suffer from systematic discrimination in state budget allocation and are among the poorest and most neglected communities in Israel.
In the ruling, the Court wrote, “The government and the Knesset avoided – in a systematic and longstanding manner – the formulation of a solution to the issues outlined in the petitions; this was in direct contravention of the positions taken by representatives of the Attorney General.”
According to Adalah Attorney Sawsan Zaher: “This ruling is very important for the advancement of socio-economic equality in Israel. The decision clearly states that the provision of tax benefits to certain communities is discriminatory because the cabinet did not consider principles of equality in formulating the criteria for receipt of these benefits, specifically to include Arab communities, which suffer from widespread poverty, especially the Bedouin communities in the Negev. This is not the first time that the High Court has ruled against the discrimination of Arab communities in the allocation of economic benefits; three years ago, the High Court ruled against the exclusion of Arab communities in the categorization of communities into national priority areas (which receive benefits), but the cabinet has refused to implement the ruling.”
According to ACRI Attorney Auni Banna, “Amendment 146 is an attempt to anchor in law the provision of tax benefits to friends and allies, and not to those who truly need them. This state of affairs violates the basic principles of equality and fair administration, acutely harming the Arab communities whose socio-economic status is the worst among the communities in Israel. Following a long period in which the High Court exhibited exceptional patience toward the government, we welcome the Court’s decision which elucidates to the cabinet that the amendment to the Act is unconstitutional and it must be amended or cancelled altogether.”
