For the First Time, Kibbutz Members to Pay Income Tax

Homes at Kibbutz Ginosar, north of Tiberias. Photo by Moshe Shai/FLASH90
Homes at Kibbutz Ginosar, north of Teveriah. (Moshe Shai/Flash90)

What had been one of the last vestiges of old socialist Israel will be eliminated as of January 1st. Kibbutz members will at that time file taxes like all other Israelis, instead of pooling their personal incomes and tax credits into a collective tax return for the kibbutz.

The same rule will apply to payments and benefits of the National Insurance Institute (Bituach Leumi). Those payment changes will come into effect on July 1, 2017, as part of the changes that were authorized as part of the Arrangements Law, which will be passed by the Knesset along with the state budget.

Working members of kibbutzim have until now largely gotten a “free ride.” Many members of kibbutzim are retired and have large numbers of tax credit points, which reduce the total amount of tax that needs to be paid. Working members of the kibbutz who filed a “joint return” with other non-working members were able to take advantage of those credits, often paying nothing in income taxes, as the kibbutz owed nothing due to the large number of pooled tax credits.

The change was approved the the Knesset Committee for Social Equality, chaired by MK Miki Zohar (Likud). Commenting on the changes, Zohar said that “the economic burden of income tax payments must be equal for everyone. The arrangements we have made will ensure that equality.”

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