Granting tax break, Knesset boosts PM’s annual income by up to NIS 200,000
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Granting tax break, Knesset boosts PM’s annual income by up to NIS 200,000

Legislation exempts Netanyahu from paying taxes on prime ministerial benefits; final version of law omits a previous proposal to award rebate retroactively

Raoul Wootliff covers politics, corruption and crime for The Times of Israel.

Prime Minister Benjamin Netanyahu toasts the upcoming Jewish New Year at the PM's office in Jerusalem on September 7, 2015.  (Haim Zach / GPO)
Prime Minister Benjamin Netanyahu toasts the upcoming Jewish New Year at the PM's office in Jerusalem on September 7, 2015. (Haim Zach / GPO)

The Knesset passed a law Tuesday exempting the prime minister from paying taxes on certain assets and effectively raising his yearly take-home pay by up to NIS 200,000 ($55,000).

The legislation, which was pushed through the Knesset in under a month via an expedited legislative procedure, passed by 50 votes to 44 after lawmakers rejected hundreds of reservations to the law presented by opposition MKs.

The new law, authored by Likud MK Miki Zohar, who is considered a loyalist to Prime Minister Benjamin Netanyahu, will provide the premier with “a tax exemption for payments, services and gifts given to him in the framework of his job, excluding his salary,” according to the text of the legislation.

The Tax Authority estimated that the measure could increase the prime minister’s annual salary by up to NIS 200,000 a year when considering both tax rebates and expenses at the Prime Minister’s Residence in Jerusalem and his private home in Caesarea.

Netanyahu currently earns a gross monthly salary of NIS 48,800 ($12,500), according to a pay slip made public by the Prime Minister’s Office in March 2016. After income, national health insurance, and social security tax deductions and vehicle expenses, the prime minister’s net monthly income stands at NIS 17,600 ($4,500).

Likud MK Miki Zohar speaks during an Interior Affairs Committee meeting at the Knesset, in Jerusalem, February 20, 2018. (Yonatan Sindel/Flash90)

Presenting the bill to the Knesset plenary, Zohar denied that the law was created for the financial benefit of Netanyahu and his wife Sara, who are both currently facing accusations of corruption and misuse of state funds, saying it was focused on future premiers and aimed to encourage the public to enter politics.

“This law is geared towards [future] prime ministers who are unable to give up on a [high-paying] career to serve the State of Israel,” he said. “If you want a prime minister who functions properly, without financial worries, you have to pay him a fair salary.”

Zohar, however, did say that with his current salary, Netanyahu was unable to pay for the upkeep of his coastal villa in Caesarea.

Netanyahu is currently Israel’s most wealthy Knesset member. In 2015, Forbes magazine estimated his net worth to be NIS 42 million ($11 million).

The bill was proposed following a December High Court decision that fees paid by the state for the upkeep of the Netanyahus’ Caesarea property, which is owned by the couple but defined as an official state residence, count as taxable benefits given to a public servant.

The final version of the bill omitted a previous proposal that the rebate be awarded retroactively for the incumbent prime minister, meaning that Netanyahu could have been given a lump sum of over NIS 2 million.

Instead, the law will only act retroactively from January 1, 2018.

Opposition MKs slammed the proposal, arguing that the public should not foot the bill for his private expenses and that it was inappropriate to pass such a law amid corruption allegations against him.

“Why should the public pay for the water in Netanyahu’s pool? And why is that more important and more urgent than raising old-age pensions?” asked Joint List MK Dov Henin while addressing the plenary before the vote.

“A quarter of the elderly are below the poverty line and we are forced to engage in additional benefits for the prime minister and his family. The agenda dictated by the Netanyahu government is a disgrace,” Henin added.

Zionist Union MK Micky Rosenthal called the passing of the law “an embarrassing low for the legislature.”

He said that the law would “confirm the continued theft of public funds to finance the hedonism of the prime minister and his family. Not only will we continue to finance the private expenses of the Netanyahu family, we will now also pay the taxes on the benefits they will receive.”

The bill comes as the attorney general considers police recommendations to indict Netanyahu for receiving illicit gifts worth up to NIS 1 million, and a month after his wife Sara was charged for misuse of state funds.

Netanyahu’s financial dealings have been the subject of intense public scrutiny and, at times, scathing criticism, amid reports of excessive use of state funds, including NIS 80,000 ($20,000) a year on water at his Caesarea home, a NIS 10,000 ($2,500) monthly budget for ice cream, and a five-hour flight for which he spent NIS 450,000 ($125,000) to have a bed installed in the plane.

Prime Minister Benjamin Netanyahu, right, and his wife Sara in Jerusalem, on May 16, 2018. (Yonatan Sindel/Flash90)

In 2015, a state comptroller report found that expenditures at the prime minister’s residence had been excessive and improper, highlighting exorbitant spending on food, cleaning, and clothing among other areas, and that budgetary practices had not been carried out with integrity and transparency.

The comptroller highlighted and criticized, for instance, hundreds of thousands of shekels spent annually on takeout food, even though the residence employed a cook; excessive spending on the couple’s home in Caesarea, even though it was only used on weekends; and the employment of a Likud Central Committee member, Avi Fahima, as a private electrician on the weekends and even on Yom Kippur at the Caesarea home.

Some of those findings formed the basis of a fraud investigation against the prime minister’s wife, Sara Netanyahu, in which she was indicted last month for charging some NIS 359,000 ($100,000) in gourmet meals to the state’s expense between 2010 and 2013, violating laws that ban the ordering of prepared food when a chef is employed at the official residence, according to Attorney General Avichai Mandelblit.

The Netanyahus have denied wrongdoing, calling the indictment “a new height of absurdity.”

At the same time, Mandelblit is also reportedly considering bringing bribery charges against Benjamin Netanyahu in so-called Case 1000, or the gifts case, one of several corruption probes against the premier.

The case, which police handed over to the prosecution in February with recommendations for a bribery charge, involves suspicions that the prime minister and his wife received illicit gifts from billionaire benefactors, including Israel-born Hollywood producer Arnon Milchan and Australian resort owner James Packer, in exchange for favors.

Times of Israel staff contributed to this report.

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