Government rejects plan granting income tax benefits to 61 settlements

Coalition leaders on Sunday rejected a plan by which 61 West Bank settlements would be added to a list of communities eligible for significant income tax breaks over the next few years, marking a defeat for Jewish Home chairman Naftali Bennett, whose party first made the proposal.

The only concession Bennett received was the inclusion of the Jewish community of Hebron — which numbers just several hundred — in the list, costing the Finance Ministry NIS 10 million. Residents of the Hebron area settlement of Kiryat Arba and those in the Hebron Hills were already included.

According to a new government decision made Sunday during a meeting between Prime Minister Benjamin Netanyahu and the heads of parties in the coalition, several towns in the Israeli “periphery” (outside central Israel) that have traditionally enjoyed these tax benefits were left out of the list of eligible cities.

On Monday, the Knesset Finance Committee is slated to vote to approve the updated list of municipalities, which went from 187 to 403 for the upcoming year at a cost of some NIS 800 million ($206 million).

Among the new cities and towns included are Tiberius, Safed, Carmiel, Katzrin and a host of non-Jewish communities including the southern Bedouin town of Rahat, the Druze village of Majdal-Shams, Majdal Krum and most large Arab villages in the Galilee.

In recent weeks, coalition members sparred over whether to include settlements on the list, with Jewish Home lawmakers demanding that 60% of West Bank settlements be included considering the high security risk they face.

The coalition’s decision to add Jewish residents of Hebron to the list was made at the last minute on Sunday after Bennett threatened to vote against the 2015-16 state budget.

Finance Committee chairman Moshe Gafni opposed the move, arguing that there was not enough money in the budget to add additional communities to the list.

“If you want to help Judea and Samaria then the government can convene a meeting and decide to increase the budget,” he said, according to the Ynet news website.

Coalition leaders agreed to consider including the 61 settlements sometime in the future, but no date was set.

The originally proposed plan to include the 61 communities would have cost an additional NIS 600 million, according to Finance Ministry estimates.

Meanwhile, the municipalities of the northern towns of Nahariya, Ma’alot-Tarshiha, Acre are among several “periphery” communities set to strike on Wednesday to protest the decision to reduce income tax benefits to their residents.

Nahariya mayor Jacky Sabag slammed the move, saying that tax breaks were one of the reasons many Israelis chose to live in the city.

“Nahariya is a regional city, the largest in the region, which provides jobs to many residents and employers,” he said. “If in fact the benefits will decrease, it would be a major blow and one which we are unwilling to accept.”

Sabag said he would meet with other mayors of area towns and cities to discuss ways of reinstating their tax break eligibility.

Acre mayor Shimon Lancry said the decision would harm his city, which saw an economic boom, and an influx of residents, in recent years due to the benefits.

Other communities such as Bet She’an, Arad and Kfar HaVradim were taken off the list altogether.