Expect House of Lords to Reverse Court Ruling That National Fund is Not Charity

The conception of charity is broader in English legal terminology than its purely philanthropic connotation, almost all institutions serving the common weal being recognized as coming under the head of charity. This is understood to be the attitude of people close to the headquarters of the Jewish National Fund, who do not disguise their disappointment at the adverse decision of the High Court of England on holding the Fund, as a company registered in Great Britain, liable to income tax. The case may come up for final decision before the House of Lords which make take a broader view of the question involved.

The Keren Kayementh Leisrael Limited is an English limited liability company, registered in London and subject, there-fore, to English law. In practice, institutions recognized by law as charities are bodies serving almost all general public purposes and include, for example, universities and religious bodies. Although universities, of course, are not philanthropic institutions, this conception of charity has been recognized so as to give such institutions certain benefits, such as exemption from income tax on property held by them. Similarly, such charities are exempted from entertainment tax in England.

It was always the opinion and belief of the management of the Keren Kayemeth that the Fund was a charity in the technical sense of the English law. This by no means affected the Zionist character of the Fund. In fact, the activities of the Jewish National Fund do serve the general welfare. It is a public utility company and is entirely devoted to public Jewish interests, even undoubtedly benefitting Palestine as a whole. It is not run for profit and its shareholders, who are members of the Zionist General Council, receive no pecuniary gain whatsoever. As a matter of fact, the Fund holds from the Attorney-General of Palestine a certificate to the effect that the Jewish National Fund is, in the sense explained, a charitable institution serving humanitarian purposes.

Some years ago an application was made by the Inland Revenue Department of the English government to the registered office of the Jewish National Fund in London for the payment of income tax on certain British consols, the property of the Fund. The application was resisted on the ground that, as a charity, the Jewish National Fund was exempt from the payment of income tax. The Department did not accept the plea and, appartmently paying more attention to the literal wording of the Memorandum of Association of the Jewish National Fund than to the actual motives of the Fund’s operations in Palestine, which have their roots in Judaism itself, insisted on claiming a not inconsiderable sum as income tax on these consols.

The Jewish National Fund management instructed its representatives in London to oppose the claim of the Revenue Office, and after negotiations streching over a number of years, the matter eventually had to be tested in the courts. This was not only a matter of paying to the government a certain sum of money and being relieved of the unpleasantness of an action. The character of the Fund as one serving public interests, which in other cases appears to be recognized in English law as charitable, was at stake.

Since the Fund was not a commercial company seeking profits by commercially exploiting the land, but rather engaged on a high public undertaking in the interest of the whole community, it was felt that the Court would exempt it from heavy taxation. The High Court of England, however, before which the case was brought, gave an adverse decision.

It may be noted that the British Attorney-General, who was counsel, drew a distinction between what the Company did and what it was entitled to do under its Memorandum of Association, arguing that the Memorandum gave it powers other than charitable in the legal sense.

The Memorandum of Association of the Keren Kayemeth was drawn up and the company registered in 1907 and it has not been considered desirable or necessary to have that Memorandum, approved at the time by Zionist authority, amended.

In view of the consequences involved and the conviction that the Keren Kayemeth is entitled to exemption from income tax, an appeal against the decision of the High Court was entered. The Court which heard the appeal very soon after the hearing in the High Court upheld the latter’s decision. There is a still higher Court in Great Britain to which further appeal may be made, namely, the House of Lords, and it is the determination of the Fund to bring the case before that tribunal. Sir John Simon, K.C., a most eminent counsel, who held the brief of the Keren Kayemeth in the Court of Appeal, has been consulted, and there is hope that the judges of the House of Lords will take a broad view of the question involved. Naturally these matters must be decided in accordance with the law and if that law should show that technically the Keren Kayemeth is not a charity, the board of directors will have to consider the taking of steps to avoid the consequences of that decision in future.