Tons of clothing, toys and medical supplies are being distributed among Israel's needy population to help them cope with the coming cold winter months. Acting Prime Minister and Finance Minister Ehud Olmert is slated to meet with U.S. President George W. Bush in Washington later this week.
According to a report in the LA Times, in his capacity as Finance Minister, Olmert made the decision to impose a tax of up to 28.5% on U.S. charitable donations intended for Israel's needy and poor. A spokesperson for Finance Minister and Acting Prime Minister Olmert justified the decision by stating, "There is no clause in the Free Trade Agreement exempting charitable donations from taxation and therefore they may be subjected to taxation."
American Jewish leaders, U.S. diplomatic officials and Israeli politicians fiercely opposed Olmert’s decision. At the time the Los Angeles Jewish community refused to pay the high amount of taxes demanded of them - over $85,000. The incident sparked a rare point of tension in the generally tranquil American Israeli diplomatic relationship.
In the wake of widespread criticism and pressure from American Jewish charities and Philanthropic organizations, the Finance Ministry announced this week that it would reduce the tax demanded from the Los Angeles Jewish community from over $85,000 to less than $8,000. Olmert's spokesperson maintained that the reduced tax was appropriate for charity items imported into Israel, in order to "maintain the precedent for future charitable donations."
A spokesman for U.S. Ambassador Richard Jones expressed American satisfaction that the Israeli government had decided to reverse their earlier ruling of taxing the donations. He expressed "gratification that the Israeli government has reconsidered its position on this matter and will now permit much needed American charity relief into Israel unencumbered." Embassy officials voiced their anger at the time of the initial report of the taxation, pointing out that other countries around the world do not subject U.S. charitable efforts to taxation.
Knesset Member Effi Eitam said that he offered an "apology to our American friends on behalf of all Israelis" and stated his commitment that the 17th Knesset will address the incident and make sure future charity donations to Israel are more smoothly received.