The Supreme Court ruled Thursday to uphold a precedent-setting ruling that allows working mothers to deduct the cost of childcare from their taxable income. The ruling was handed down last year by Tel Aviv District Court justice Magen Altuvia.
The case began with a motion by self-employed attorney Vered Peri, who argued that the cost of daycare for her two children should be considered a business expense, as she would have been unable to work without sending her children to daycare centers. Altuvia ruled that Peri could deduct one-half the cost of a daycare center that provided food from her pre-tax income, and two-thirds the cost of a daycare center that did not provide food.
The Tax Authority appealed the case. Tax Authority officials argued that daycare was never meant to be recognized as a business expense, but rather was recognized in other ways, such as through tax benefits for working mothers of young children.
If the ruling were to become nationwide policy, it could cost the state up to NIS 2 billion per year, they warned.
While the court upheld the verdict, it also left the Knesset the option to pass legislation officially declaring childcare not to be a business expense. As long as no Knesset legislation exists, however, women may make a tax deduction for childcare.
Women's Groups Satisfied
Peri expressed satisfaction with the verdict, as did feminist organizations. The Israel Women's Network said, “This is good news for Israeli women and young families. The court has set an important precedent that recognizes that the natural right to motherhood does not reduce women's rights to financial independence.”
The ruling “will provide an incentive for the inclusion of women in the workforce, and will ease the financial burden on young families,” the group concluded.
Attorney Talia Livni of the women's group Naamat expressed satisfaction as well, but called for assistance for low-income mothers as well. “This is a huge step towards making the working world suitable for mothers. However, we must not forget those women who do not reach the tax threshold. Therefore, the next step is free childcare, in the afternoon as well.”
Low-Income Mothers: What about Us?
While some mothers expressed joy over the court's ruling in media interviews, several others were less pleased. The less a woman earns, the less she pays in taxes in any case, they pointed out. In addition, working mothers already receive significant tax breaks, so that women who earn relatively low salaries do not reach the tax threshold anyways, and will not benefit from the ruling at all, while women who earn NIS 11,000 a month or more will be able to make significant deductions.
The ruling thus encourages high-income earners to put their children in childcare and return to work, while failing to assist poor families and single mothers who lack well-paid careers, they said. “A woman who agonizes over whether or not to spend a few shekels on a toy or an item of clothing for her child won't benefit, while a woman who worries about which color her brand-new car should be will get thousands of shekels,” one woman told the Hebrew-language daily Yediot Aharonot.
Supporters of the ruling argued that by encouraging high earners to return to work, it would help the economy nationwide. “The ruling is just. It will make it easier for women to join the workforce, especially with young children, and will increase the gross national product,” said Education Minister Gidon Saar.