Government readies compensation package for businesses hurt by Iran conflict
Economic cost of campaign against Iran stands at $1.2 billion, says Tax Authority chief; finance minister says Israel received ‘divine help’ in both military and economic affairs
Sam Sokol is the Times of Israel's political correspondent. He was previously a reporter for the Jerusalem Post, Jewish Telegraphic Agency and Haaretz. He is the author of "Putin’s Hybrid War and the Jews"
The government on Monday announced its plan for compensating those affected financially by the ongoing conflict with Iran, including grants for businesses whose income streams have been reduced and workers who have been furloughed.
The outline, whose aim is to create “as broad a safety net as possible for the working public,” was presented at a joint press conference by officials including Finance Minister Bezalel Smotrich, Knesset Finance Committee Chairman Moshe Gafni, Business Sector Presidium chair Dubi Amitai, and Histadrut Labor Federation chief Arnon Bar-David.
According to the Finance Ministry, the outline is focused on maintaining economic “continuity,” with an emphasis on small and medium-sized businesses. Businesses with an annual turnover of NIS 12,000 ($3,450) to NIS 400 million ($114 million) that has decreased by more than 25 percent month over month will be compensated from the Property Tax Compensation Fund.
Businesses bringing in less than NIS 300,000 ($86,000) a year will be eligible for a fixed business continuity grant “depending on the level of damage to the business,” while businesses earning NIS 300,000 to NIS 400 million will be eligible for the reimbursement of 7%-22% of their expenses, “depending on the rate of damage to business turnover, as well as a refund of 75% of salary expenses in relation to the level of damage.”
Businesses with an annual turnover of NIS 300,000 to NIS 100 million ($28 million) will have compensation capped at NIS 600,000 ($172,000).
Employees placed on unpaid leave due to the cessation of economic activity during the war will receive payments from the National Insurance Institute and will not be forced to use any of their accrued vacation days.
“The activation of the compensation track for businesses throughout the country sends a clear message to the citizens of Israel: You are not alone,” Smotrich declared.
The outline was welcomed by the Histadrut’s Bar-David, who said the labor federation reached an agreement with the government in order to “provide certainty to the economy and to the workers of Israel.”
“We did it during COVID, we did it at the beginning of the war [with Hamas], and we are doing it now as well,” he said.
The Business Sector Presidium’s Amitai also praised the new outline, saying that “thanks to national responsibility and close cooperation, we were able to reach a compensation plan that will provide certainty to businesses and employees and contribute to the stability of the economy.”
Shortly after the outbreak of open conflict with Iran earlier this month, Smotrich announced that he was consulting with both Amitai and Bar-David and that they would decide on steps “to support the economy and workers and to maximize the functional continuity of the economy during the war.”
The Federation of Local Authorities in Israel has reported that around 9,000 people have been displaced from their homes since the beginning of Israel’s operation against Iran, which responded by firing over 500 ballistic missiles and around 1,000 drones at Israel.
“Over the last 20 months, we have been dismantling, God willing, the ring of strangulation, the ring of fire that the Iranian ayatollah regime built around us for nearly half a century. We have cut off the octopus’s arms, one after another…and now we are dealing with the head of the octopus in the Iranian regime,” Smotrich told reporters.
“Thank God, we have great divine help not only in the military campaign but also in the economic campaign” and the government will be there to support those who have lost their homes in Iranian strikes, he promised.
According to Tax Authority director Shai Aharonovitch, over 35,000 claims have been submitted to the government in relation to “direct damage” caused by the war with Iran, a third of which are already being processed — and there are currently some 60 hotels hosting the displaced.
This comes on top of the 75,000 or so claims submitted between October 7, 2023, and the launch of Israeli strikes against the Iranian nuclear program.
The economic damage caused by the conflict with Iran stands at around NIS 4.5 billion ($1.2 billion) so far, Aharonovitch said, adding that not all expected claims have yet been filed and that there are “close to 130 teams assisting in the field and doing appraisals.”
“No one will be left without a home, even if it takes a few days or a few weeks. Right now, we have authorized local authorities to keep people in hotels, the evacuees, for 14 days, and we will authorize them to stay beyond that as long as necessary,” Aharonovitch added. “No one will be thrown out onto the street, God forbid. We will find an arrangement for everyone.”
Addressing the Knesset Internal Affairs and Environment Committee last week, Haim Bibas, chairman of the Federation of Local Authorities, claimed that much of the burden of domestic damage caused by the war with Iran had fallen on local government, with the daily costs of assisting those affected rising to over NIS 15 million ($4.3 million) a day, “and this is just the beginning.”
“If the state does not come to its senses and stand by our side with all its might, the home front will be left without oxygen,” Bibas declared, adding that some 4,948 evacuees were, as of the time he was speaking, in need of assistance.
In a joint statement last Wednesday, the finance and interior ministries announced that beyond alternative housing, a preliminary NIS 500 ($144) would be allocated to every resident “whose home is damaged and uninhabitable” with another NIS 1,500 ($432) per resident going to local authorities “to provide a quick and immediate response to expenses arising from the evacuation of residents” such as street cleaning and transportation.
The Times of Israel Community.