Lawmakers scuffle in Knesset over municipal tax plan as Arab communities join strike

Smotrich looking to compel cities to end strike that has shuttered schools and services in dozens of towns; Labor MK threatens to go to court, says move discriminates against Arabs

Hizky Sivak of the Emek Hefer Regional Council is taken out by Knesset guards from a Finance Committee meeting and a vote on the Arnona Fund at the Knesset in Jerusalem, on May 15, 2023. (Yonatan Sindel/Flash90)
Hizky Sivak of the Emek Hefer Regional Council is taken out by Knesset guards from a Finance Committee meeting and a vote on the Arnona Fund at the Knesset in Jerusalem, on May 15, 2023. (Yonatan Sindel/Flash90)

Angry lawmakers sparred with each other on Monday in a volatile Knesset committee meeting over a controversial move to redistribute tax income between municipal authorities, with at least two participants forcibly ejected.

The meeting comes as several major cities launched an open-ended strike, closing schools and suspending garbage collection and welfare services to protest a government plan that will take a large chunk of the taxes they collect from local businesses.

In a stormy Finance Committee meeting, participants shouted and shoved each other. MK Idan Roll from Yesh Atid was forcibly removed, as was Hizky Sivak, deputy head of the Emek Hefer regional council.

The Federation of Local Authorities in Israel, representing about 200 Israeli municipalities, announced the strike on Sunday, saying it would continue until the coalition backed off from its so-called Arnona Fund plan. Arnona is property tax, set and managed by each municipality.

The plan will take a percentage of property taxes collected from local businesses, though not from residents, to be put into a fund that will go to help indebted and poorer municipalities. As such, the law will disproportionally affect cities with thriving business areas or industrial parks.

Labor MK Gilad Kariv said the plan was engineered to send the majority of the funds to ultra-Orthodox communities and not to Arab towns, which also suffer from financial hardships, and threatened to petition the High Court of Justice against it.

“Because of the clause that only the ultra-Orthodox will receive and the Arab communities won’t, we will meet at the High Court,” Kariv told the meeting calling it an example of the “distributive justice of the Haredi parties.”

Meanwhile, the heads of several Arab towns and regional authorities announced that they were also joining the strike.

“The distribution of this fund is not just and there is nothing good here for the Arab citizens. In fact, it’s the opposite,” the Arab mayors said.

Among the cities already striking were Tel Aviv, Holon, Ramat Gan, Givatayim, Kfar Saba, Ra’anana, Rishon Lezion, Herzliya, Hod Hasharon, Modiin, Ramle, Ness Ziona, Ashdod, Hadera, Haifa, Nesher, Beit She’an, Kiryat Ono, Shoham, Ganei Tikva, Yokne’am, Maale Gilboa and Eilat. Several regional councils were also taking part.

Other cities including Jerusalem, Lod, and Harish announced they would not be striking.

Ashkelon and Yavne joined the strike, but kept their schools open after having shut them during last week’s rocket fire from Gaza.

View of an empty classroom at a school in Tel Aviv, during a general strike of some Municipalities and local authorities, on May 15, 2023. (Flash90)

Hebrew media reported that Finance Minister Bezalel Smotrich was in talks with the Justice Ministry in a bid to issue a court order against the striking mayors, arguing that they had exceeded their authority.

In the cities that were on strike, schools from kindergarten up were shuttered, garbage collection and welfare services were halted, municipal inspectors stopped handing out fines and city offices were closed to the public, as were libraries, cultural and sports centers.

Special education and matriculation exams were exempt from the strike.

The Knesset’s Finance Committee was set to vote to include the Arnona Fund as part of the Arrangements Bill accompanying the 2023-2024 state budget, which is expected to be finalized within the next two weeks.

Minister of Finance Bezalel Smotrich attends a press conference at the Ministry of Finance in Jerusalem on May 14, 2023. (Noam Revkin Fenton/Flash90)

Backers say the measure will help less wealthy municipalities incentivize residential real estate instead of business — though businesses pay more tax and are therefore currently more attractive to municipal authorities — and have put an emphasis on the fund helping to build communities far from Israel’s center.

Detractors say that it punishes communities that have already invested in attracting employers, and takes money that would otherwise be directed toward improving services, such as education and culture.

They also accuse the coalition of planning to use the funds to pay for sectoral demands made by coalition partners, like subsidies to the ultra-Orthodox. They also note that settlements in the West Bank are exempt from contributing to the fund, and that it is structured in a way that makes Arab municipalities less likely to benefit.

Smotrich on Sunday vowed there would be no compromise with the mayors, saying they “know the truth, that this bill creates justice between the municipalities in the center, which are in an attractive location and benefit from infrastructure and in any case constitute the business center of Israel, and the far-off municipalities in the periphery.”

Mayors from ultra-Orthodox towns said that the move came to address longtime injustices.

Elad Mayor Yisrael Porush said that his town was established with only 3% of its area zoned for businesses, whereas secular towns had much more.

Calling ultra-Orthodox towns “ghettos,” Porush told the Kan public broadcaster that “Israel has set up some 200 local councils, why do only Haredi cities not have places for business or work?”

The ultra-Orthodox community has the lowest percentage of participation in the workforce, with many men choosing to instead study Torah full-time. Critics also say that the refusal of their schools to properly teach core secular subjects leaves them unprepared and without the skills necessary to join the workforce.

Elad Mayor Yisrael Porush poses for a picture at his office in Elad, May 11, 2022. (Yossi Aloni/Flash90)

Meanwhile, Interior and Health Minister Moshe Arbel from the ultra-Orthodox Shas party said Monday the strikes were politically motivated against the government, even though several of the striking cities are run by the ruling Likud party.

“The decision of several councils to strike today is a political decision against the government,” he said speaking to Radio Kol Beramah. “We will take from the strong and give it to the weak.”

However, he promised that “we will make sure not to financially destabilize the authorities.”

The head of the local government federation, Modiin Mayor Haim Bibas, slammed the government for disinformation on Monday.

“To those who are anonymously briefing [the press] that the Arnona Fund will boost the periphery and hurt the strong cities: the fund will seriously harm Eilat, Yeruham, Beit She’an and a long list of other cities,” Bibas tweeted. “Don’t let them fool you.”

“We will continue to oppose with all our power those trying to harm the citizens of Israel,” he said. “Our stance is absolutely clear: We oppose this law, and this is your opportunity, coalition residents [of towns adversely affected by the plan], because in the end you live in these cities.”

Carrie Keller-Lynn contributed to this report

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