A controversial bill proposal to heavily tax donations by foreign countries to NGOs passed a preliminary vote in the Knesset plenum on Wednesday.
According to the proposal, authored by Likud MK Ariel Kallner, donations to NGOs from a “foreign state entity” will be taxed at 80%, but the finance minister, with the approval of the Knesset Finance Committee, can award a tax exemption in “special circumstances.” In addition, the law says the court system will not hear cases filed by NGOs whose “main funding” is from foreign state entities and who do not receive Israeli state funding.
According to the bill’s preamble, its purpose is to block “indirect influence by government and foreign state entities” by taxing donations to NGOs that act as “agents of change” on behalf of these entities.
A memo published by two researchers from the Israel Democracy Institute on Monday called the bill “another attack against democracy” by the government since it intends to silence critical voices.
The IDI researchers, Prof. Mordechai Kremnitzer and Dr. Amir Fuchs, argued that the majority of NGOs affected by the bill would be those that support human rights against government violations and are critical of the current government. Many of these NGOs receive funding from the European Union and other Western countries, such as the US, UK, and Germany.
In addition, the researchers argued that the fact that the finance minister can exempt certain NGOs under “special circumstances” (which are not defined) reveals that the bill is at least politically motivated, as the finance minister could exempt NGOs it deems “friendly” to the government while maintaining the tax on NGOs that are not.
The researchers also argued that the provision that blocks the court from hearing petitions by NGOs whose “main funding” is from foreign state entities is unconstitutional because it violates the basic right to petition to a court to receive justice and unlawfully limits the court’s jurisdiction.
THE RESEARCHERS also warned of potential harm to Israel’s standing among Western democracies.
“It is difficult to understand the justification for harming funding from friendly countries like the United States, Germany, and the United Kingdom,” they wrote. “On the other hand, there is no harm in funding from foreign private entities, precisely those whose interests are much less transparent than friendly governments.” They added, “Weakening human rights organizations may accelerate international efforts to take legal actions against Israeli leaders and military commanders abroad.”
Only found in Western countries with more authoritarian leadership
Finally, similar laws are only found among the more authoritarian countries of the Western world, they wrote.
“This proposal is almost unparalleled in any Western democracy. The only democratic countries where there are laws that somewhat resemble this law are Hungary and Poland, which, as is well known, have been facing significant democratic regression in recent years. In Hungary, every civil society organization funded by foreign countries or donors is required to label itself as such on its website and other platforms where it operates, in a much more moderate way than the proposed law,” the researchers wrote.
In a message to its supporters, the NGO Zazzim slammed the bill as an effort to “eliminate organizations that demand a pluralistic society and fight for freedom of information, equality, and against political corruption.”
The NGO accused the government of “taking advantage of our focus of worrying about the fate of the hostages to complete their coup d’etat and eliminate democracy.”
Combatants for Peace noted that under the language of the bill, the vast majority of Israeli human rights organizations would lose their ability to petition Israeli courts for judicial review in human rights cases or in lawsuits against the government.
“This is a direct assault on democracy, stripping civil society of one of its most important tools to protect human rights,” the NGO said in a statement to its supporters.
Noa Sattath, executive director of the Association for Civil Rights in Israel, said, “This proposed legislation is a direct assault on Israel’s democracy and part of the ongoing judicial coup. It represents a systematic attack on all institutions that check government power and specifically targets human rights organizations working to protect minorities in Israel and Palestinians in the occupied territories.”
She continued, “The selective taxation targets only foreign state funding from Israel’s closest allies – including the United States and European Union member states – who support democracy, human rights, and minority protection. Meanwhile, right-wing organizations relying on private donations remain unaffected, and the finance minister has discretionary power to exempt certain organizations while those receiving state funding are automatically excluded.”
Peace Now wrote a letter to President Isaac Herzog demanding his involvement and arguing that remaining silent on the issue was akin to supporting it.