Two British MPs have raised concerns in parliament about taxpayer subsidies for charities that support settlement activity in the Israeli-occupied West Bank.

Charities registered in Britain are entitled to various tax benefits regardless of where they operate, provided their activities are entirely charitable.

But can fund-raising for settlers truly be considered charitable when most of the world – Britain included – regards the settlements as illegal? Assisting this activity through tax subsidies also conflicts with the British government's declared policy on settlements as well as its international obligations.

UN Security Council Resolution 465, for instance, calls upon all states "not to provide Israel with any assistance to be used specifically in connection with settlements in the occupied territories".

In 2005, the European Council also called for "the abolition of financial and tax incentives and direct and indirect subsidies, and the withdrawal of exemptions benefiting the settlements and their inhabitants".

In Norway last year, following calls for the government to comply fully with Resolution 465, the finance ministry withdrew tax benefits from a charity called Karmel-instituttet in order to "ensure that the system of tax deductions does not benefit organisations that actively support or contribute to acts that are in contravention of international law". 

The Norwegian ministry said the decision was based on information from Karmel-instituttet about its funding of settlements and its stated intention to continue providing such support. Funds collected by Karmel-instituttet are said to have provided 23 caravan homes and three "study centres" for the settler outpost of Alonei Shilo in the occupied territories. 

So far, though, the British government has been less than forthcoming on this issue. In the House of Commons over the last few weeks, Labour MP Richard Burden (who is a member of the all-party parliamentary group on Palestine) has asked a series of questions and received a series of stonewalling replies:

Question: Has the government had discussions with Norway about its decision to exclude Karmel-instituttet from eligibility for tax relief?

Answer: "No discussions have taken place with the Norwegian Government on this matter."

Question: What assessment he has been made of the extent of compliance by UK charities with the European Council decision on the abolition of financial and tax subsidies to organisations benefiting from developing Israeli settlements?

Answer: "Evidence of misuse of charity funds, or any illegal activities by charities in England and Wales ... should be passed to the Charity Commission to consider."

Question: What assessment has the government made of the extent of UK compliance with paragraph seven of UN Security Council Resolution 465?

Answer: "The UK complies with this resolution ... The UK, together with the general international community, is clear on the status of settlements: they constitute a clear violation of international law, are an obstacle to peace, and a threat to the viability of the two-state solution."

Question: Has the government informed the Charity Commission of the European Council decision of 16 June 2005?

Answer: "The Charity Commission is aware of the European Council declaration."

Question: How much tax relief applied for via Gift Aid was received by organisations funding projects in Israeli settlements in the Occupied Palestinian Territories in each of the last five years?

Answer: "The information requested ... could not be obtained without disproportionate cost."

Question: How much Gift Aid has been claimed on donations made to the British Friends of Ariel in each of the last five years?

Answer: "I am unable to answer the question because HM Revenue and Customs is subject to a strict duty of confidentiality in relation to customer information."

British Friends of Ariel, the charity named by Burden, states that its objectives are:

1. To further education, learning and research, including education in the Jewish religion.

2. To establish and maintain or contribute to the establishment or maintenance of such charitable institution or institutions for the religious education and training of Jews whether in the United Kingdom, Israel or elsewhere as the trustees may think fit.

3. To provide financial assistance for the relief of poverty. 

It also states: "In furtherance of the said objects but not otherwise the trustees shall have powers to assist the Ariel Institutions in Israel." 

"Ariel" is one of the names given to Jerusalem in the Hebrew Bible but it is also the name of one of the largest West Bank settlements. 

A similarly-named organisation in the United States, American Friends of Ariel (also tax-subsidised), states very clearly that its purpose is to support the settlement, though it doesn't actually use that word. It describes Ariel as "the capital of Samaria", as "an integral part of the State of Israel" and "one of the primary keys to Israel's future".

Last month, Jeremy Corbyn, another Labour MP, asked what steps the Chancellor of the Exchequer is taking to end tax relief for charities that fund Israeli settlements.

Treasury minister Sajid Javid gave an unhelpful reply. "For tax relief to remain intact,", he said, "HM Revenue and Customs must be satisfied that the charity has taken reasonable steps to ensure that payment will be applied for charitable purposes only."

The minister added that "charitable purposes" are defined by the Charities Act 2011. 

A key principle of the 2011 Act is that charitable work must be "for the public benefit". So how does the British government reconcile the "public benefit" requirement with support for settlements which it officially describes as "illegal" and "an obstacle to peace"? Burden and Corbyn are still waiting for answers to that.

Posted by Brian Whitaker, 21 January 2013.