Will other countries follow? Norway bans tax deductions for donations to Israeli settlements

Israeli settlements under construction near Jerusalem, occupied West Bank.

Issam Rimawi APA images

In a precedent setting move, Norway has ended tax deductions for organizations that donate funds to benefit Israeli settlements on occupied Palestinian land.

According to a statement from Norwegian People’s Aid:

Following advocacy-work and pressure from Norwegian People’s Aid (NPA) and the Norwegian Union of Municipal and General Employees (NUMGE), the Norwegian Ministry of Finance today announced their decision to exclude the Norwegian organisation “Karmel-instituttet” from the list of organisations that the Norwegian public may get tax deductions for providing funds to. The reason behind the decision is that the organisation provides financial support to Israeli settlements in the occupied Palestinian territories.

A tax deduction means that if a tax payer makes a donation of, say, $100 to an eligible charitable organization, she would not pay any taxes on that $100. If, for example, the tax rate is 30 percent, that would translate effectively into a government subsidy of $30 to the tax-exempt organization.

Karmel-instituttet is a Norwegian organization that has for years “provided financial support to the illegal Israeli settlement of Alonei Shilo, in the occupied Palestinian territories,” according to NPA. The tax-deductible funds collected from Norwegian citizens have been used to build around half of the two dozen structures in the colony.

Norwegian People’s Aid is “the labour movement’s humanitarian organisation for solidarity” and, according to its website, “supports Palestinians’ legitimate right to independence and freedom from oppression, occupation and forced exile.”

Implementing international law – at last

This significant victory represents one of the rare occasions of a state actually taking action to enforce international law with respect to Israel. According to NPA:

Effective from 1 January 2012, the Norwegian Ministry of Finance can remove organisations from the list of organisations approved for tax-deductible gifts, with the stated purpose of ensuring Norwegian follow-up of resolutions from the UN Security Council. One such resolution is UN SC Resolution 465 (1980), which calls on all states ‘not to provide Israel with any assistance to be used specifically in connection with settlements in the occupied territories’.

In its letter, the Ministry of Finance

stated that their intention is to ensure that the system of tax deductions does not benefit organisations that actively support or contribute to acts that are in contravention of international law.

Will other countries follow?

The Norwegian move will provide encouragement to campaigns in other countries to remove preferential tax status from charities that actually raise funds to help Israel violate Palestinian rights and international law.

In the UK, for example, Stop the JNF has been working to remove charity status (and eligibility to receive tax deductible donations) from the Jewish National Fund, the Israeli Zionist organization that engages in theft of Palestinian land for exclusive Jewish use under the guise of environmental programs.

Earlier this year, Stop the JNF expressed optimism that this could be the last year the JNF enjoys charity status in the UK.

US is a huge source of tax deductible funds to settlements

In 2010, the New York Times investigated the huge amounts of tax deductible US donations that benefited Israeli settlements and found:

A New York Times examination of public records in the United States and Israel identified at least 40 American groups that have collected more than $200 million in tax-deductible gifts for Jewish settlement in the West Bank and East Jerusalem over the last decade. The money goes mostly to schools, synagogues, recreation centers and the like, legitimate expenditures under the tax law. But it has also paid for more legally questionable commodities: housing as well as guard dogs, bulletproof vests, rifle scopes and vehicles to secure outposts deep in occupied areas.

In at least one case, the funds have been used for activities linked to violence:

Some pro-settler charities have obscured their true intentions.

Take the Capital Athletic Foundation, run by the disgraced Washington lobbyist Jack Abramoff. In its [Internal Revenue Service] filings, the foundation noted donations totaling more than $140,000 to Kollel Ohel Tiferet, a religious study group in Israel, for “educational and athletic” purposes. In reality, a study group member was using the money to finance a paramilitary operation in the Beitar Illit settlement, according to documents in a Senate investigation of Mr. Abramoff, who pleaded guilty in 2006 to defrauding clients and bribing public officials.

However, successive US administrations have done nothing to stem the flow of charity funds to Israel’s illegal colonial activities:

Tax breaks for the donations remain largely unchallenged, and unexamined by the American government. The Internal Revenue Service declined to discuss donations for West Bank settlements. State Department officials would comment only generally, and on condition of anonymity. “It’s a problem,” a senior State Department official said, adding, “It’s unhelpful to the efforts that we’re trying to make.”

The wind is shifting

The Norwegian decision on tax deductions comes as a growing number of states, including the European Union, are considering bans on imports from Israeli settlements on Palestinian land occupied by Israel in 1967. Earlier this year South Africa required that goods produced in settlements be labeled as such, a measure seen as a step towards a ban.

These steps – modest though they are given the decades of international inaction – at least represent a shift from nothing but lip service against Israeli settlements to the first stirrings of sanctions that can begin to impose a real cost on Israel for its continued crimes.