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Coalition outrage over AG’s move to end tax breaks for yeshivas

Shas Party leader Aryeh Deri warned that the pressures placed on the Haredi public may lead to a widespread tax revolt by the sector.

MK Aryeh Deri at the assembly hall of the Knesset, the Israeli parliament in Jerusalem, during a vote on a bill to remake Israel's Judicial selection committee, March 27, 2025. Photo by Chaim Goldberg/Flash90.
MK Aryeh Deri at the assembly hall of the Knesset, the Israeli parliament in Jerusalem, during a vote on a bill to remake Israel’s Judicial selection committee, March 27, 2025. Photo by Chaim Goldberg/Flash90.

Members of Israel’s governing coalition lashed out at Attorney General Gali Baharav-Miara after she announced on Sunday an end to tax breaks for benefactors of Haredi yeshivas in which students evading army conscription are found.

“The ousted and anarchistic attorney general, pushing ahead with arrests and harsh sanctions against Torah scholars, is driving the Haredi public to the brink, and will bring it to a tax revolt, a break from the police and a deep rift with the state authorities,” Aryeh Deri, leader of the ultra-Orthodox Shas Party, posted to X on Sunday.

He warned the prime minister and leaders of the right-wing parties that they must stand up against the “persecution” if they want the right-wing bloc to survive.

Deri was seconded by Justice Minister Yariv Levin of the Likud Party: “I join MK Rabbi Aryeh Deri’s call not to remain silent any more. For a long time now, I have been calling on the government and the coalition to unite, to rise above all internal disputes and to put an end to the discriminatory judicial anarchy, under which many segments of the public are being trampled upon.”

Levin called for an “urgent meeting” of the right-wing faction leaders. “The time has come for us to make a series of relevant decisions that will return control of the country to the government and put an end to judicial anarchy,” he said.

National Security Minister Itamar Ben-Gvir also weighed in. “I’m thrilled that everyone is finally understanding what I’ve been shouting alone from the very first day of the coalition’s formation: that the criminal and anarchistic attorney general must be fired.

“Sadly, back then, I was a voice crying in the wilderness, and my Haredi colleagues opposed her dismissal. Even now, there’s still something that can be done, and I’m calling on my colleagues in the government to take immediate steps to send her straight home—without that, right-wing rule has no meaning,” he said.

Deeply unpopular with the government, Baharav-Miara was fired in a unanimous vote by the Cabinet in August 2025, but was reinstated by the High Court, which rejected the government’s decision in December of that year.

On Sunday, the attorney general announced that “it has been determined that non-profit organizations in which there are students who evade military service will be denied a tax benefit under Section 46 of the Income Tax Ordinance.” Donors thus would no longer receive a 35% tax benefit, a move certain to impact financial gifts to such institutions.

The attorney general based her decision on recent High Court decisions. On April 26, the court ruled that the government wasn’t complying with its previous rulings to enforce Israel Defense Forces conscription in the Haredi sector. It called on various ministries to make decisions regarding economic benefits aiding those evading conscription, including subsidies for daycare centers, apartment benefits and public-transportation discounts. It called on the government to update it on implementation measures by June 1.

The court noted in its ruling that Haredim make up 80% of those who evade enlistment.

Haredi leadership discourages military service, seeing it as corrupting and a distraction from Torah study.

While most non-Haredim serve in the army, most Haredim do not. The disparity has caused sharp friction within Israeli society, with the majority being dissatisfied that the burden of service is not distributed equally.

The shock of the Oct. 7, 2023, Hamas invasion exacerbated the problem, leading to widespread calls for an end to blanket exemption from service for Haredim. Adding to the pressure is the realization that the military requires a larger standing army to deal with multiple fronts.

Last month, IDF Chief of Staff Lt. Gen. Eyal Zamir warned the Knesset Foreign Affairs and Defense Committee that the army faced a manpower shortage. The IDF has repeatedly said it needs 12,000 more soldiers, mainly for combat duties.

The government attempted to solve the decades-old problem with a conscription law. Its supporters argued that only with the backing of the Haredi leadership and gradual increases in enlistment quotas could the issue be resolved. Opponents said the law would only enshrine the existing inequality where the vast majority of Haredim don’t serve.

Ultimately, the bill lacked support even within the coalition. The Haredi parties, an important component of the coalition, which supported the proposed law, reacted by pulling their support from the government and calling for early elections.

The Israel Democracy Institute, a left-leaning think tank, noted in a March 12 explainer, that the effort given to the bill up to that point had been “immense,” including 86 sessions, or more than 300 hours, in the current (25th) Knesset Foreign Affairs and Defense Committee, “continuous, full-time oversight” by Cabinet Secretary Yossi Fuchs, dozens of position papers, and staff hours estimated at NIS10 million (~$3.5 million).

On Monday, the Knesset House Committee voted to approve for first reading the Bill for Dissolution of the Twenty-Fifth Knesset.

If passed by the Knesset plenum, elections will be held between Sept. 8-20. An exact date will not be selected until the second and third readings of the bill. (Every Knesset bill requires three readings, or votes, in the Knesset plenum.)

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