The Ministerial Committee on Legislation unanimously passed Sunday a proposal by Justice Minister Tzipi Livni (Hatnua) to cancel debts for every Israeli citizen facing debt collection measures from the Enforcements and Collections Authority under certain preconditions.
Citizens who face legal action from the Authority on debts below 400,000 shekel ($102,777) and are defined as having "limited means" to repay them will be absolved of the debt, the proposal states - in an amendment which, if passed, will be in effect for three years.
The amendment was proposed on the basis of new data suggesting that current debt arrangements in Israel, which demand payments to be made over years in the face of possible prison time, do not allow the impoverished to rebuild their lives and do not even benefit the creditors pursuing them.
In addition, the proposal includes a mechanism that takes into account the economic situation and the rights of creditors (with attention to the existence of assets owned by the debtor, which may be used to repay debt), in order to prevent abuse of the exemption. Creditors would be notified of the debt cancellation in the event it applies to the debtor in question, as well.
Livni said that "in the Jewish tradition, the fallow (Shmitta) year - like the one we're in now - is not just for rest and renewal of the earth, but also provides an opportunity for people to embark on new beginnings and a fresh start."
"This amendment seeks to enable the weak in society to get out from crisis and recover - realizing exactly this value proves, once again, there is no real contradiction between Judaism and democracy, because so many of the values embodied in the Jewish tradition integrate natural, harmonious with democratic values," she added.
Israel's poverty problem has become headline news over the past several months, after it was revealed Israel has one of the highest poverty rates of OECD countries and that 50% of Holocaust survivors live below the poverty line.
Recently, the Knesset allocated 1.7 billion shekel ($550 million) to fight poverty nationwide, which Welfare Minister Meir Cohen (Yesh Atid) hailed as a "historic moment."
President Reuven Rivlin also launched the "Shmitta project" to this end earlier this month, a mission to forge connections between the government, companies, and poor families to work on Israel's poverty problem and help some 5,000 families climb out of debt.