Why the Loss of "Section 46" Is the Ultimate Threat to the Yeshiva World
The Attorney General’s move to revoke Section 46 tax exemptions is a far greater threat to yeshivas than losing state funding. By crippling private donations and overseas support, this "death blow" may force Haredi leaders to choose between a Draft Law and the total collapse of their institutions.
While Haredi lawmakers remain focused on the cessation of direct state subsidies, a far more devastating financial earthquake is looming. The Attorney General’s directive to revoke Section 46 status, the tax-exempt certification, for yeshivas that do not comply with the draft is not just another sanction; it is a potential death blow to the infrastructure of the Haredi world.
The Backbone of Private Funding
To understand why this is more significant than the loss of government budgets, one must look at the mechanics of yeshiva financing. Most institutions are registered as non-profits (Amutot) that rely heavily on private donations.
Section 46 provides a dual incentive:
Without this status, the incentive to donate evaporates for the middle class, and the actual value of every shekel donated drops sharply due to taxation.
The Collapse of Overseas Support
The crisis extends beyond Israel’s borders. "Heavy" donors from abroad, the lifeblood of major institutions, often require local tax certifications to facilitate international transfers and ensure their contributions are recognized under strict global tax regulations. If the Israel Tax Authority revokes its recognition, the pipeline of foreign currency that has historically filled the gap left by government cuts could run dry.
The Haredi Leadership's Blind Spot
There is a growing sense that Haredi MKs and religious leaders have yet to grasp the gravity of this development. While they have "dragged their feet" on the Draft Law, assuming that private philanthropy would act as a safety net for lost state budgets, the revocation of Section 46 removes the net itself. The choice is no longer about "compromise or less money"; it is now a binary choice: A viable Draft Law or the shuttering of hundreds of institutions.
An Ironic Savior?
Ironically, the only entity capable of halting this "death blow" may be the High Court of Justice (Bagatz). Historically, the court has ruled that Section 46 status must be granted to any non-profit meeting objective criteria, preventing the Finance Committee from using it as a political tool.
Should the justices break with the Attorney General’s opinion, as they have done numerous times during the current government's tenure, the judicial branch might inadvertently become the final shield for the very institutions that often view it as an adversary.