Only Our Friends Pay Taxes

Israel is a heavily-taxed nation. There is an income tax, there is 17% VAT on all goods and services, there are customs duties on many items, there are property taxes, real estate transaction taxes, and excise taxes on things like tobacco, alcohol, and gasoline and diesel fuel. I’m sure I’ve forgotten something.

Regarding the excise taxes on gas and diesel, it’s possible for charitable or humanitarian organizations to get an exemption. But apparently it’s not so easy. The Magen David Adom ambulance that takes sick people or accident victims to the hospital doesn’t have one.

There is a an interesting story by reporter Gilad Zwick in today’s Israel Hayom newspaper, concerning who is exempt from the fuel tax.

It turns out that many organizations that are less than charitable to the idea of a sovereign Jewish state are “humanitarian” in the eyes of Israel’s Tax Authority. The biggest one is UNRWA, the UN agency that supports and encourages the growth of the population of stateless “Palestinian refugees,” most of whom are not actually refugees by any definition other than UNRWA’s. They are descendants of the 550,000 to 750,000 Palestinian Arabs that fled the area that would become the state of Israel at the time of the 1948 War of Independence. Today there are as many as 5 or 6 million Arabs with refugee status, according to UNRWA. The agency provides services in including food aid, education, and healthcare to these people, and maintains the “refugee camps” – today, usually city neighborhoods – in which they live, in Gaza, Judea/Samaria, eastern Jerusalem, Lebanon, Syria, and Jordan.

Palestinian refugee status, according to UNRWA, is hereditary. Anyone whose father was a refugee is one. Even if a “refugee” has citizenship in another country, like Jordan, he keeps his status. And it is passed down from generation to generation, which is why there are so many more today than there were in 1948.

No other agency defines “refugee” this way. The office of the UN High Commissioner for Refugees (UNHCR), which deals with all refugees other than Palestinians, considers refugees “persons fleeing the risk of persecution or serious harm, including human rights violations, armed conflict or persecution. In the absence of protection in their countries of origin, which the State is unwilling or unable to provide, they are forced to cross an international border and seek safety in other countries” (the full legal definition is here). UNHCR provides services to these people and to their immediate family members including children, but children of refugees can’t pass the status down to their children. By this definition of “refugee,” there are probably about 30,000 Arab refugees from 1948 that remain.

In the decade after WWII millions of refugees were awash in the world. Most didn’t return to their home countries, but were resettled in other countries. Some 800,000 Jews from various countries in the Middle East and North Africa were among them, and virtually all of them ended up in other countries, including of course Israel.

But Palestinian refugees were different. UNRWA, which was originally established as a temporary expedient to help the displaced Palestinian Arabs (and theoretically, also Jews!) became a permanent institution. Unlike other agencies, which aimed to resettle refugees and get them off the dole and into productive lives, UNRWA simply maintained the population, and by paying generous benefits for each child, encouraged its growth.

The Arab nations, which would have been the rational place to resettle Palestinian refugees, refused to take them, saying that only “return to their homes” in Israel was possible, even where great-grandchildren of refugees were concerned. In 1955, the Arab League issued a declaration forbidding their members from granting citizenship to Palestinians. Although Jordan granted the refugees citizenship after 1948 (they revoked some of these in 2004-5), no other Arab state has done so. Even the PLO has said that they will not do so, if they should succeed in establishing a state! In Lebanon, Palestinians are officially discriminated against in education, employment, and other areas. Every attempt to improve the conditions of the refugees (e.g., providing permanent housing) has been frustrated by the Arab states, UNRWA, or the PLO.

UNRWA is primarily supported by Europe and the US (the Arab states contribute little). President Trump cut the US contribution somewhat, but President Biden restored it. However, the geometric increase in the refugee population dictates that this situation cannot long continue, and it’s unfortunate that the new administration failed to recognize the need to shake things up.

Some 98% of the employees of UNRWA are Palestinians. So it’s not surprising that the organization’s activities support the Palestinian movement, whose main objective is to free all of “Palestine” from Jewish sovereignty. Many UNRWA workers (including teachers) are associated with terrorist organizations, and anti-Jewish incitement is part of their unofficial curriculum. Rockets have been stored in Gazan UNRWA schools and have been fired at Israel from their yards. Despite its ostensibly humanitarian purpose, UNRWA is an anti-Israel organization in every way.

The fact that UNRWA does not pay taxes on its fuel is ludicrous. In the past six years, the amount of this exemption has come to 167 million shekels, close to $51 million. 90% of this fuel has been used in the Gaza strip, so this amounts to a subsidy of $45 million – to Hamas.

But UNRWA is not the only anti-Israel group that gets this exemption. Various religious groups also do. For example, the World Lutheran Federation, which, while not quite on a level with Hamas, is clearly an unfriendly organization. There are also the Mennonite Central Committee and Diakonia, which provide funds for numerous anti-Israel projects and organizations, including some with connections to terror.

There is no reason for Israel to subsidize these enterprises, which are explicitly or implicitly calling for its destruction.

How can it be that they don’t have to pay while Magen David Adom does? Reporter Zwick called the Defense Ministry, which referred him to the Finance Ministry. “No comment,” they said.