Israeli Supreme Court Allows Continued Tax Benefit Denial to Ultra-Orthodox Yeshivas

The Israeli Supreme Court on Thursday dismissed a petition demanding the revocation of tax benefits from ultra-Orthodox yeshivas under Section 46. The court did not hold a full hearing on the legality of the move because the State Attorney's Office had already agreed with the petitioners' position and is implementing it. Consequently, the sanctions remain in effect, and the tax benefits previously withdrawn from the yeshivas will not be reinstated at this stage. The Attorney General's policy to continue denying these benefits will persist unless a different decision is made.

However, the justices emphasized that dismissing the petition does not constitute approval of the Attorney General's stance. The court neither ruled the denial lawful nor justified but decided the current petition was unnecessary since its demands are already being enforced. This creates a situation where the court has neither endorsed nor halted the policy. For the affected yeshivas, the outcome remains unchanged: they continue to be deprived of the tax benefits under Section 46.

The dispute is expected to return to the Supreme Court through a counter-petition filed by the organization "Emet LeYaakov," which challenges the tax benefit denial and seeks to examine the legal basis for the Attorney General's decision. Until this counter-petition is heard and resolved, the denial of tax benefits will remain in force. Only in that proceeding will the court fully consider the arguments against the policy and decide whether the benefits can continue to be withheld from the yeshivas.