Individual kibbutz members will be required to pay a 25% personal income tax as well as the Social Security Healthcare tax starting next January, according to a move by the Finance Ministry, Israel Hayom reported Thursday. The new taxes are expected to enrich the Finance coffers by close to $80 million annually, and the Social Security income by about $50 million.
Since the beginning of communal history, each kibbutz used to pay a corporate tax for all the members, and even after the change in taxation kibbutz members without outside income will not be required to file individually. But over the past few decades many kibbutz members have been working off the kibbutz grounds, contributing a portion of their income to the cooperative — and the Israeli tax authority would like to take a peek at those monies.
The Finance Ministry’s new rule must still go through the Knesset Finance Committee for approval, and the agricultural lobby is expected to put up a hard fight against the changes.
Amitai Porat, the Religious Kibbutz Movement Secretary General, and Nir Meir, the Kibbutz Movement Secretary General, on Wednesday wrote Prime Minister Netanyahu requesting that he halt Finance Minister Moshe Kahlon’s proposed changes in the tax code regarding kibbutzim. They told the PM that “Minister Kahlon is not interested in meeting us to find a solution that would make it possible to reexamine the tax code while maintaining and protecting the kibbutz character and the communal life in which we believe.”