Israel offers NGOs a deal: Tax exemption for political silence

The Netanyahu government is working to legislate a controversial bill that offers tax exemptions to foreign-funded NGOs on the condition that they refrain from political activity, thereby restricting their right to shape public opinion.

Foreign-funded non-governmental organizations (NGOs) will be exempt from a 23% tax if they pledge not to organize political meetings, participate in political demonstrations, or make written or oral statements aimed at influencing the public ahead of next year’s Israeli elections.

According to a report in Haaretz, a committee in the Israeli Knesset discussed a bill that would impose a 23% tax on NGOs receiving funds from foreign governments. This tax would not be applied if the organizations commit to not criticizing government policies for three years after receiving a donation.

The Knesset’s Constitution, Law, and Justice Committee convened on Monday to discuss the new bill, which was introduced a few days prior. The bill targets Israeli NGOs funded by foreign governments, the majority of which operate in the human rights sector.

If the NGOs pledge to refrain from attempting to influence political decisions, they will be able to benefit from the tax exemption enjoyed by other NGOs operating in Israel.

The activities NGOs must avoid include those prohibited for civil servants or public officials, such as holding leadership positions in political parties or public institutions. Additionally, NGOs will be required not to organize public meetings of a political nature, participate in political demonstrations, or make written or oral statements before elections.

Such NGOs will also be banned from lobbying in the Knesset.

Dr. Amir Fuchs from the Israel Democracy Institute told Haaretz that this bill would “cause serious harm to civil society.” According to Fuchs, the bill will force NGOs receiving foreign government funding to make a cruel choice: “Either they will pay a 23% tax on donations, which will most likely cause the funding to stop altogether because foreign governments do not want to finance Israel’s state budget; or they will sign a ‘loyalty declaration’ pledging to refrain from influencing public policy for three years.”

Fuchs also said the bill would weaken the right of such NGOs to petition the High Court of Justice, stating that the filing fees for these organizations would be “particularly high.”

According to information obtained by Haaretz, some NGO representatives who wanted to attend Monday’s committee meeting were denied entry and told there was no room in the chamber.

Among those blocked from entering were representatives of organizations directly affected by the bill, such as Itach-Maaki – Women Lawyers for Social Justice and The Aguda – The Association for LGBTQ Equality in Israel.

In February, the Knesset gave preliminary approval to the bill in question. According to the original proposal, there would be no obligation to consider complaints from Israeli NGOs largely financed by foreign political actors, which could block legal recourse for these NGOs on many issues. Furthermore, every donation received by such NGOs from foreign political actors would be subject to an 80% tax, unless the Minister of Finance decided otherwise with the approval of the Knesset Finance Committee.