Israeli Supreme Court Reviews Tax Benefits for Yeshivas with Draft-Dodging Students

The Israeli Supreme Court is hearing a petition concerning tax benefits granted to yeshivas where students do not enlist in the military. The panel of justices Dafna Barak-Erez, Gila Kanfi-Shtainitz, and Ruth Ronen is examining the legality of tax deductions for donors to these religious institutions. Earlier this month, the Israel Tax Authority informed dozens of yeshivas and Torah study institutions that they would no longer qualify for tax benefits if they enroll students who have not regularized their military status. This decision is based on Section 46 of the Income Tax Ordinance, which allows donors to approved public institutions to receive tax credits for their contributions.

The Tax Authority's letters emphasized that the state cannot indirectly or directly support draft evasion through public funding, citing Supreme Court rulings and existing laws. The petitioners argue that the state is effectively endorsing systematic illegal draft evasion by allowing these benefits. Attorney Hagai Klay, representing the petitioner organization Israel Free, stated, "There is no claim against supporting yeshivas, but the claim is against the state's illegal support of criminal behavior. This is a systematic, consistent, and widespread violation of the law."

Opponents, representing the yeshivas, warn that revoking recognition and tax benefits would harm their public educational activities. Justice Kanfi-Shtainitz questioned why the petitioners had not exhausted all administrative remedies before approaching the court, noting that the government has developed and is implementing a policy framework on this issue. The state attorney, Neta Oren, supported the petitioners' position, arguing that continued support for institutions with draft-dodging students is unauthorized.

The court debated whether the petition should be dismissed for premature filing or whether there is still a need for judicial review. Justice Barak-Erez suggested that even if the state's position is fundamentally correct, nuances in implementation might justify the court's involvement. The hearing is ongoing, with the justices considering how to proceed.