Israeli Civil Rights Group Urges Supreme Court to Cancel Controversial West Bank Tax Benefits Law

The Association for Civil Rights in Israel (ACRI) filed an urgent petition to the Supreme Court on Sunday demanding the annulment of the "Tax Benefits Law for Settlements in the Eastern Line of Conflict Area (Temporary Provision), 2026." The petition argues that the law, enacted amid the election campaign, severely violates principles of equality, rule of law, and legislative generality by favoring a predetermined group of beneficiaries in the West Bank.

The law grants a 7% income tax credit to residents of settlements within two kilometers of the security fence, based on criteria linked to Defense Ministry security requirements for student transportation. However, ACRI contends these criteria were retrofitted to benefit specific settlements, excluding other communities facing similar security threats, such as northern Israeli towns under rocket fire. The petition describes the law as a disguised election bribe that undermines public trust in the legislative process.

The petition also reveals chaotic and unprofessional handling of the bill in the Knesset Finance Committee, where criteria shifted repeatedly without reliable data or a final list of eligible settlements. Legal advisors warned that the frequent changes and lack of credible information prevented informed decision-making. Government legal and tax officials opposed the law, stating tax benefits are not an appropriate tool for addressing security threats.

During committee discussions, an official from the Finance Ministry presented research showing the limited effectiveness and high cost of tax incentives for encouraging migration, but was silenced by the Treasury Minister's advisor, who insisted only the minister's political stance be presented. This led to open political negotiations over the law's scope, exposing that the security criteria excluded ultra-Orthodox settlements.

ACRI emphasizes that unlike previous tax benefit laws based on comprehensive professional assessments and objective criteria, this new law was passed amid factual chaos to enable unlawful political favoritism just before elections. Due to its immediate and retroactive application from January 1, 2026, and the risk of misuse of public funds for partisan purposes, ACRI requests the Supreme Court to immediately halt the law's implementation until the petition is resolved.