Tel Aviv District Court Judge Magen Altuvia made a precedent-setting ruling on Monday, declaring that a working mother could claim tax deductions for the cost of sending her children to daycare. Altuvia ruled that daycare should be treated as a business expenditure and not as a private cost.
Altuvia ordered the state to allow self-employed attorney Vered Peri to deduct one half the cost of a daycare center that provided her children with meals from her taxes, and two-thirds of the cost for a daycare center that did not provide food.
Peri told the court that the cost of daycare was purely a business expense and not a private luxury, as she would have preferred to remain home with her children, but was unable to do so. If she had taken time away from her career, Peri said, she would have been unable to rebuild her client base. “It is obvious that if not for the fact that I had to work and earn a living, I would have preferred to spend time with my children,” she argued. Peri asked to deduct NIS 115,000 in daycare costs from taxes paid between the years 1999 and 2001.
Tax Authority attorneys argued that lawmakers had not intended to recognize daycare costs as business expenditures. Instead, the cost of daycare was recognized in other ways, such as through tax breaks for working mothers of young children, they said. The Tax Authority expressed concern that a ruling in Peri’s favor would allow all working mothers who send their children to daycare to claim tax deductions, and would cost the state approximately two billion shekels every year.
Following the ruling in Peri’s favor, the Tax Authority announced that it would appeal to the Supreme Court.
Women’s groups and several Members of Knesset celebrated the ruling, and expressed hope that it would encourage more mothers of young children to work out of the home. The ruling would make it financially worthwhile for mothers of young children to put their children in daycare, said Attorney Talia Livni, the head of Naamat (Movement of Working Women and Volunteers). While the ruling applies to both men and women, Livni said, it will have a larger effect on women, because women are currently more likely than men to leave their careers in order to care for their young children.
Rina Bar-Tal, head of the Women’s Lobby, called on other working mothers to file lawsuits similar to Peri’s. A study conducted on behalf of the Women’s Lobby showed that tens of thousands of women would work out of the home if they could deduct daycare costs from their taxes, she said, and fewer women would leave their careers. In the end, Bar-Tal said, the state would reap financial benefits by allowing women to deduct the cost of daycare, because more women would work and therefore more women would pay taxes.