Israeli Supreme Court Strikes Down Tax Benefits Law for Excluding Arab Towns

23/05/2012
(Haifa, Israel) Last night, 22 May 2012, the Israeli Supreme Court issued a judgment accepting eight separate petitions filed in 2005 by local municipal authorities, the Association for Civil Rights in Israel (ACRI) and Adalah, demanding the end of special tax relief for Jewish towns only.

The petitioners demanded the cancellation of provisions of the Income Tax Amendment Law, which award reductions in income tax for residents of certain towns. The tax benefits were given as incentives to residents of towns bordering the Gaza Strip. However, as the law was debated in the Knesset in 2005, a number of other towns were added for political reasons, without any objective reason. Despite the fact that Arab villages and towns are the poorest in Israel, not one Arab town in the south was included on the list. During hearings before the Supreme Court, the Attorney General acknowledged that the process of determining the list of towns to receive benefits was flawed, as the Tax Authority also pointed out by objecting to the inclusion of some of the municipalities on the list.

Attorney Awni Bana from ACRI stated, "The government is able to take a decision to grant tax breaks to those who really deserve it. Equality, social justice, and good governance mean first that decisions of this kind must be taken according to standards of transparency and fairness. The fact that this order did not include any Arab municipality is additional evidence of the systematic discrimination against Arab citizens, and evidence of the politically corrupt culture that tolerates cronyism."

Attorney Sawsan Zaher of Adalah responded to the judgment by stating that: "We welcome this important decision. This case has been pending in the court for seven years, while the government and Knesset did nothing to rectify the situation. We hope that the government will now implement the court's decision and implement the law so that it ensures equality for all citizens. Every decision about granting tax concessions must take into account the dire economic situation of Arab communities, especially those in the Naqab (Negev), and to include these communities in the list of towns that receive tax benefits."

Case citation: HCJ 6901/05, Mayor of Rahat Municipality, et al. v. Minister of Finance, et al. (decision delivered 22 May 2012)

For more information:


Press Release, 16 September 2010:
Israeli Supreme Court Decides Income Tax Law Discriminates Against Arab Citizens of Israel

Press Release, 27 July 2005:
Adalah and Arab Local Councils Petition Supreme Court Against Discriminatory Law Which Excludes Arab Bedouin Towns from Income Tax Benefits
Read More: Discriminatory Laws, Supreme Court, Economic rights
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