On 18 July 2005, Adalah submitted a petition to the Supreme Court of Israel against the Minister of Finance and the Attorney General (AG), requesting the inclusion of five Arab Bedouin towns in the Naqab (Negev) - Hura, Kessife, Lagiyya, Rahat, and Shaqib al-Salam (Segev Shalom) - in the list of localities eligible for income tax benefits. The petition, which was submitted in the name of the heads of Hura, Lagiyya, and Kessife local councils, the mayor of Rahat Municipality, residents living in the five towns cited in the petition, and in Adalah's own name, asks that the Court cancel the amendment to the Income Tax Ordinance (No. 146), which was enacted by the Knesset on 21 June 2005. Adalah Attorney Hassan Jabareen submitted the petition.

The objective of Amendment No. 146 is to provide tax benefits to localities in Israel which are located up to seven kilometers away from the Gaza Strip, in accordance with Governmental Decision No. 2633. The benefits would grant citizens of Israel in these localities a reduction of 13% in their income tax payments. However, following the first reading of the bill, the Knesset's Finance Committee added three further towns (Bet She'an, Hazor HaGelilit and Arad) and two regional councils (HaArava HaTikhana and Hevel Elot) to the list of localities eligible for income tax benefits, despite the fact that they are not located within a seven kilometer radius of the Gaza Strip. In total, a further 18 Jewish localities in the Naqab were added to the list of those eligible for such benefits by the Finance Committee.

On 20 June 2005, the AG sent letters to the Prime Minister, the Minister of Finance and the Justice Minister, requesting the withdrawal of Amendment No. 146 prior to its submission to the Knesset for final approval. In his letter, the AG stated that, following the changes made by the Finance Committee, the proposed amendment is discriminatory and harms the principle of equality, due to the lack of clear and consistent criteria by which the named localities were selected for income tax benefits.

Seven Arab Bedouin towns in the Naqab, including Tel el-Sabe (Tel Sheva) and Arara al-Naqab, formerly enjoyed tax benefits in accordance with the amendment to a 2001 tax law, which granted tax benefits to all recognized Arab Bedouin towns in the Naqab. The amendment was passed in order to provide economic aid to recognized localities throughout the Naqab, including those suffering from poor socio-economic conditions, and marked the first instance in which tax benefits were granted to all recognized Arab Bedouin towns.

In 2003, the Economic Recovery Law was enacted, which revoked the income tax benefits enjoyed by five of the recognized Arab Bedouin towns in the Naqab, despite the fact that all five are classified in the lowest cluster (1 on a scale of 1-10) of localities on official socio-economic indices. Moreover, under the 2003 law, localities with a higher socio-economic status than that of the recognized Arab Bedouin towns remained eligible for income tax benefits. The table below illustrates the socio-economic ranking of a number of localities which remained eligible for income tax benefits following the enactment of the Economic Recovery Law, and the ranking of the five Arab Bedouin towns which were deemed ineligible for such benefits.

Adalah argued that arbitrarily removing the five Arab Bedouin towns, whose socio-economic status is among the lowest in Israel, from the list of localities entitled to income tax benefits constitutes discrimination, since it violates the principle of equality. Since 88 localities in the Naqab and the South of Israel are entitled to income tax benefits, it is imperative that the poorest localities in the same geographic area are afforded these same benefits, Adalah contended.

Adalah therefore demanded: i) the cancellation of Amendment No. 146; ii) the application of clear and consistent criteria in determining which localities receive income tax benefits in the Naqab; and iii) the inclusion of the five aforementioned Arab Bedouin towns in the list of localities deemed eligible for such benefits. A Court hearing has been scheduled for 10 August 2005.

It should be noted that the Association for Civil Rights in Israel (ACRI) filed a petition (H.C. 6880/05, Association for Civil Rights in Israel v. Minister of Finance, et. al.) to cancel Amendment No. 146 regarding the addition of localities not located within a seven kilometer radius of the Gaza Strip to the list of those eligible for income tax benefits.

H.C. 6901/05, Mayor of Rahat Municipality, et. al. v. Minister of Finance, et. al. (case pending).

 The Petition (H)

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