"The purpose underlying the legislation of section 11 of the Ordinance is to encourage the population to settle and establish a center of life in localities that are entitled to the tax benefit, in order to, inter alia, thicken the population in those localities for the purpose of realizing security and national interests, as well as to promote the economic and social development of these localities.(See: Tax Appeal (Haifa District) 21313-05-15 Yaakov v. Acre Tax Assessor, para. 28 [published in Nevo] (November 25, 2016)).
- It therefore follows that in determining the "center of life" of a taxpayer for the purposes of section 11 of the Ordinance, it is appropriate to give significant weight to the taxpayer's conduct in the beneficiary locality, which assists in the realization of the security and national interests of the State or promotes the economic and social development of the locality. In other words, among the objective connections that constitute the taxpayer's entitlement to the benefit of a beneficiary locality, the tax assessor must relate to the taxpayer's contribution to the development of the locality, to its transformation into an attractive place of residence and to its socio-economic growth. Moreover, the tax assessor is required to give this figure of the contribution to the settlement a specific weight in comparison to the other relevant data and affiliations. To the extent that such a contribution is related to the taxpayer's activity for which he is liable for income tax in the tax years for which he claims eligibility, this figure should be given even greater weight. As this contribution increases, the taxpayer's connection to the locality grows closer to the point that the locality becomes the center of his life. This connection I will read later in my remarks the connection of the donation or the connection of the contribution to the settlement. It is clear that the strengthening of the donation connection advances all the purposes of the benefit of a beneficiary locality: providing assistance to the communities of the periphery; economic support for residents of peripheral communities; and attracting the population to these communities. Hence the specific weight - although not decisive - of the connection of the contribution to the settlement in determining the taxpayer's center of life for the needs of section 11 of the Income Tax Ordinance.
- To clarify the matter, I will present the following example: Two taxpayers live in the city of Kiryat Shmona - a beneficiary locality under section 11 of the Ordinance - and have identical objective ties to that city. The only difference between these two taxpayers is that one of them works in a public institution that makes a significant contribution to the city of Kiryat Shmona, while the other taxpayer works from his home for an employer based in Tel Aviv. In these circumstances, and subject to the other connections to Kiryat Shmona, we may reach the conclusion that the taxpayer employed by an institution that contributes to Kiryat Shmona will be recognized as a resident of the city for the purposes of section 11 of the Ordinance, while the other taxpayer will not receive this recognition and will not be found entitled to a beneficiary settlement benefit.
- In this matter, my opinion differs from that of the trial court. According to the trial court, the purpose of section 11 of the Ordinance is to encourage "real immigration"; that is, to encourage long-term settlement in the beneficiary localities. In my own opinion, the taxpayer's intention to settle in a beneficial locality over time undoubtedly constitutes part of the entirety of the connections to that locality, but it is not a decisive consideration. In my opinion, temporary residence for an extended period - which is measured even in months, as opposed to years - can also establish the taxpayer's entitlement to a benefit under section 11 of the Ordinance when the activity of that taxpayer, for which he is obligated to pay income tax, makes a significant contribution to the community. The connection to the donation has a special weight and a place of honor within the scope of section 11 of the Ordinance.
The center of a professional athlete's life
- Within the framework of the appeals before us, it is incumbent upon us to place the aforementioned affinities in the world of professional sports. In this framework, we must examine the existence of these affinities and determine the relative weight of each and every affiliation against the background of the activity of professional sports players and their teams as a unique business mechanism.
- Before I do so, I will keep from our agenda the state's argument that it refuses to see competitive team sports, and professional football in particular, as a unique business mechanism. According to this argument, the law of professional football in the matter of tax law is the same as the law of any ordinary business. According to the state's approach, this is how other municipal applications were unanimously ruled 7883/12 Sports Connection in Tax Appeal v. Ministry of Finance - Customs Department and Tax Appeal Civil Case 3 [published in Nevo] (September 9, 2015) (hereinafter: Sports Connection Matter). In this context, the state relies on the words of Justice Hendel, who explained why we must view the payment paid by an Israeli soccer team for a "player's card" that is transferred to it from another team, which is abroad - while permitting the employment contract between that team and a player who arrives in Israel - as the import of "goods" for which the Israeli team is obligated to pay VAT under the Value Added Tax Law. 5736-1975 (hereinafter: the VAT Law).
In particular, the state directs us to the following: