Israel High Court Questions Tax Benefit Petition After Policy Shift

The High Court of Justice of Israel questioned the necessity of continuing to hear a petition challenging tax benefits for donations to yeshivot, religious schools, after the state adopted the petitioners’ central legal argument and began to implement a new policy. Israel Hofsheet, an NGO advocating for religious freedom, filed the petition against the Finance Ministry and Minister Bezalel Smotrich, arguing that the tax benefits under Section 46 of the Income Tax Ordinance constitute indirect public funding of institutions that serve draft-eligible students avoiding military service.

The court focused on the Attorney-General’s acceptance of Israel Hofsheet’s position, specifically questioning whether the petition had already been resolved. The state representative confirmed they are no longer authorized to fund students who haven’t regularized their military status and are taking steps to prevent such funding.

The Israel Tax Authority is now requiring yeshivot to declare student information for verification against military records to determine continued eligibility for tax benefits. Israel Hofsheet maintains that continued recognition of these institutions would simply shift direct funding to an indirect subsidy. The court will issue a decision on whether to continue proceedings.