The Finance Committee, chaired by MK Moshe Gafni (United Torah Judaism), on Monday approved regulations extending the exemption from the 17% Value Added Tax given to “international aid organizations which have been recognized by the Director General of the Finance Ministry and the Defense Ministry,” provided that the types of fuel and the amounts were approved by said directors general prior to their purchase.
A change the Committee made in the regulations determines that the exemption for such organizations will require the approval of the Coordinator of Government Activities in the Territories (COGAT), so that the eligible organizations will be supervised.
The ordinances are meant to regulate the activity of international aid organizations operating in Gaza, so that they will be exempt from VAT on the purchase of fuel.
Last week, Chairman Gafni postponed the vote on the exemption, over claims made by MKs that at least some of the organizations that would receive the tax exemption are hostile to the State of Israel. Gafni said he would hold the vote only after a debate of the consequences of approving or rejecting the tax exemption proposal.
During Monday’s discussion, the Finance Committee resolved the issue by determining that giving the exemption to any organization would require COGAT’s approval. A number of MKs objected to this arrangement, and demanded that a VAT exemption for any organization require the authorization of the Finance Committee.
Major General Kamil Abu Rukun, the Coordinator of Government Activities in the Territories, told the committee that “a central part of the violence in Gaza over the past two years stems from civil-humanitarian distress. The question is whether we want to go back to those rounds of violence, to 85-week protests that we experienced week after week, which weakened the Gaza envelope communities and all those who dealt with it. The alternative was to prevent the distress and improve the reality in Gaza. The basis for this is the high unemployment rate and the disgraceful poverty.”
“The straw that broke the camel’s back was in the beginning of 2018, when the Palestinian Authority decided to impose sanctions on Gaza, leading the residents of Gaza to stage ‘Marches of Return’ and demonstrations,” Abu Rukun explained.
“We came up with an idea of how to alleviate this distress, and the Palestinian Authority put a spoke in our wheel in order to prevent an improvement. One of the ideas for improvement was operating a power plant. Until the power plant was activated, they had four hours of electricity a day. It was decided to hand over the mission to the UN envoy. He activated one of the UN’s groups, United Nations Office for Project Services (UNOPS) a recognized and organized body that operates in cooperation with more than 100 countries. This helped activate the power plant. The organization signed a contract with the Paz fuel company. The current situation is nearly 12 hours of electricity a day in Gaza.”
MK Oded Forer (Yisrael Beitenu) asked whether Israel, in return for this humanitarian aid, demanded anything related to “our captives and missing persons in Gaza.”
MK Bezalel Smotrich (Yamina) said, “So far it has not worked with the approval of the two directors general. We saw that the same organizations were entered on the list. Now it is proposed that the COGAT will also be required to approve the list of eligible organizations. Unfortunately, COGAT allows all kinds of organizations to go wild in Judea and Samaria, just to keep things calm there. This is why I do not trust it, and demand that the matter require the Finance Committee’s approval or, alternatively, to grant approval only for the purpose of transferring fuel to the Gaza Strip, if this is thought to be the right thing to do.”
MK Ofir Katz (Likud) said, “It is good that we spotted these two organizations last week. These are organizations that truly operate against the State of Israel and IDF soldiers. There is no logic in giving them benefits.”
MK Nir Barkat (Likud) said, “Why give them any discount at all? If there will be pressure or fear of violence, they will demand to receive all the fuel for free. Why not pay the market price for fuel?”
MK Ram Ben Barak (Yesh Atid-Telem) said, “There is a judicial branch in the country, and it will determine the list. I don’t want to determine it based on Google.”
Major General Abu Rukun stressed that he wants the VAT exemption only for UNOPS and that he does not want to grant the exemption to other organizations.
Chairman Gafni insisted that the exemption be extended until the end of 2021, instead of the six-month extension mentioned in the original version of the proposal, in order to make certain that the mechanism is working properly. “In the end, we formulated a version that excludes these types of organizations from the arrangement,” Gafni said.
The votes for the proposal: MKs Ram Ben Barak (Yesh Atid-Telem), Keren Barak (Likud), Ofir Katz (Likud), Michal Shir Segman (Likud), Kathrin Shitrit (Likud), Yinon Azoulay (Shas), Ram Shefa (Blue and White), Shlomo Karhi (Likud), Ahmad Tibi (Joint List) and Aida Touma-Sliman (Joint Arab List) Arab List).
Against: MKs Bezalel Smotrich (Yamina) and Oded Forer (Yisrael Beitenu). Abstained: MK Nir Barkat (Likud).