Olam HaTorah's Plan to Bypass Tax Crisis

The Section 46 Crisis

The crisis erupted in late May when Baharav-Miara ordered an immediate halt to tax deductions on donations to haredi institutions that include students subject to military draft orders. The directive, issued under Section 46 of the Income Tax Ordinance, threatened to devastate the financial ecosystem supporting Israel's yeshiva world by eliminating the tax incentives that drive much of the philanthropic giving to these institutions.

The attorney general's move created an impossible dilemma for yeshiva administrators: either exclude draft-age students from official enrollment lists submitted to tax authorities — potentially abandoning hundreds of students — or watch donor contributions plummet as tax benefits evaporate.

According to sources familiar with the deliberations, the uncertainty triggered panic among yeshiva leadership, with legal advisors offering conflicting guidance on how institutions should respond to the new enforcement regime.

The Olam HaTorah Solution

In its letter to institutional heads, Keren Olam HaTorah confirmed that after extensive consultations with accountants and tax law specialists, the foundation has developed alternative funding mechanisms that would preserve support regardless of how yeshivos choose to handle their student reporting.

"An institution that chooses, based on private legal counsel, not to include certain students on lists reported to authorities will not lose the foundation's support," the letter stated explicitly. The foundation emphasized it would explore alternative channels for transferring budgetary allocations to such institutions.

Critically, Keren Olam HaTorah stressed that its guidance does not constitute a recommendation or directive for how yeshivos should proceed. "This is not an instruction on how to act, but rather providing tools for institutions to navigate the legal complexity created by the attorney general's directive," foundation officials clarified.

The letter noted that the foundation expects institutions will "of course" not universally exclude students from reporting, suggesting a case-by-case approach based on individual legal assessments.

Broader Context of Escalating Tensions

The Keren Olam HaTorah initiative represents the first major institutional response to the Section 46 crisis, which has become a flashpoint in the broader battle over haredi military service. The foundation's intervention comes as enforcement actions against yeshiva students intensify dramatically across Israel.

Just days ago, police stormed Ohr Yisrael Yeshiva in Petah Tikva, deploying tear gas inside the study hall during a midday raid that witnesses described as a shocking violation of the institution's sanctity. The incident, which saw officers physically pursue students into the yeshiva compound, has become emblematic of what haredi leaders characterize as an unprecedented campaign of intimidation.

The crisis has also triggered political upheaval, with United Torah Judaism chairman MK Moshe Gafni declaring his party will vote against all government budget transfers after Prime Minister Netanyahu confirmed that critical daycare subsidy legislation for kollel families has been shelved indefinitely.

Olam HaTorah's strategic framework marks the haredi community's first coordinated financial countermeasure to the government's enforcement campaign, signaling that Torah institutions are preparing for a prolonged standoff over the fundamental question of who controls Jewish education in Israel.

Further updates to follow as yeshivos respond to the foundation's guidance.