No taxation or spending without representation?
One of the hottest topics in Israel is checks and balances. Could tax be the key? No taxation or spending without representation?
One of the hottest topics today is checks and balances. There are three main branches of power in any government: (1) the legislature (Knesset, Congress, Parliament); (2) the executive (government authorities); and (3) the judiciary. Some say the legislature is supreme because it is elected by the people. Others say that checks and balances are needed to prevent abuse of power between elections. Prior to the Magna Carta in England in 1215, the king was supreme because his parents were supreme.
So who really has power and when?
Israeli developments:
The Israeli Supreme Court ruled in favor of letting administrative authorities apply their discretion. The case concerned a tender organized by the National Insurance Institute (NII) looking for subcontractors to provide chronic health care services . Among other things the NII required a number of years in business to help demonstrate financial stability. The petitioners complained this discriminated unfairly against start-up providers. The Supreme Court ruled that the NII had exercised its discretion reasonably based on professional advice received (Case 65665-12-25 of April 27, 2026).
However, we are now seeing a deeper struggle between the three branches of power in Israel. The government seems to be defying the Supreme Court over appointments and other matters.
United States Developments:
In the Loper Bright case in 2024, the US Supreme Court ruled that the Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous; an earlier precedent – in the Chevron case – was overruled.
More recently, the US Supreme Court ruled on June 29, 2026, that the US President has the power to remove independent agency heads at will, overturning the Humphrey’s Executor case precedent. The only exception to this are the members of the Federal Reserve Board, as determined by Trump v. Cook decided the same day, due to the significant impact the Board has on the U.S. economy (Accreditation: Wikipedia).
Learning from history:
When King John of England signed the Magna Carta in 1215 with English barons he averted civil war. John had levied heavy taxes used to finance war in France which he then lost. He was forced to agreed that all future taxes would require approval of a council of 25 barons. Not exactly democracy. But in 1688 England underwent a Glorious Revolution in which King James II was expelled after frequently suspending the English Parliament and ruling by whim. William and Mary became King and Queen after agreeing to a bill of rights which put fresh limits on raising taxes: “…levying money for or to the use of the Crown, by pretence of prerogative, without grant of parliament… is illegal“
The US constitution of 1787 and the US bill of rights of 1791 (amending the US constitution) are essentially US-wide updates of the Magna Carta and the English bill of rights. Other ex-UK commonwealth countries like Canada, Australia adopted their own constitutions after obtaining their independence from the UK. Israel didn’t as Ben Gurion opted for the status quo.
So as mentioned, it seems tax is the key to constitutional peace harmony.
Comments – Israel today and tomorrow:
Squabbling between the three branches of power is not good for any country, especially a small country like Israel surrounded by enemies. If Britain has its Magna Carta and the US and most other countries have a constitution, maybe it is time for Israel to adopt a constitution? The present system of basic laws is poorly understood and has many gaps.
If hypothetically, President Herzog, were to refrain from signing new tax and spending legislation until constitutional progress occurs, maybe this would encourage all concerned to sign up to a constitution.
The potential advantage of a constitution is that it would lay down a framework of agreed principles that would require a special Knesset majority (say 2/3) to amend.
How? By restricting the power of the purse. No taxation or spending without representation, as above.
Representation would be enhanced in the constitution by including a procedure for staging a referendum if a number of citizens petition for such a referendum.
That way, the legislature, executive and judiciary cannot ride roughshod over each other by claiming to know what the people want.
A constitution including a referendum clause would help provide much needed checks and balances.
As always, consult experienced professional advisors in each country concerned at an early stage in specific cases.
The writer is a certified public accountant and tax specialist at Harris Consulting & Tax Ltd.