Smotrich accused of blocking expanded tax benefits to northern communities, funneling money to settlements

By Ariela Karmel

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28 May 2026, 11:50 am

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Ariela Karmel is a political correspondent at The Times of Israel. She previously reported for Calcalist and Haaretz. She holds an MA in Middle Eastern and African History from Tel Aviv University and a BA in Political Science from the University of British Columbia.

A marathon overnight debate in the Knesset Finance Committee over a bill granting additional tax benefits to threatened communities in the north and West Bank settlements ends without a vote after Finance Minister Bezalel Smotrich rejected efforts to expand the benefits to a broader swath of northern communities under threat from Hezbollah.

The bill, advanced by Religious Zionism MK Zvi Sukkot and backed by Smotrich, would grant expanded tax breaks to dozens of West Bank settlements under a new “security threat” criterion, including a 25 percent boost in tax benefit points. The original proposal did not include northern communities at all but was later expanded to include communities within two kilometers of the Lebanese border, after critics said the minister was prioritizing his base while northern communities remain under near-daily bombardment.

During the debate, committee chairman Likud MK Hanoch Milwidsky says he pushed to broaden the proposal to include communities within nine kilometers of the border, but that Smotrich rejected this.

“I tried to convince [the Finance Ministry] that there should be no distinction between the 0-2 kilometer line and the 0-9 kilometer line in the conflict border area. Unfortunately, the finance minister vetoed the matter,” says Milwidsky.

Northern local authority heads harshly criticize the decision during the debate, accusing the government of abandoning the devastated region.

“Either all of us are included, or none of us are. We are no one’s punching bags,” Mateh Asher Regional Council head Moshe Davidovich tells lawmakers.

Opposition lawmakers accuse Smotrich of effectively funneling money to settlements as well as Haredi communities, which have also been added to the original bill, to gain support from ultra-Orthodox parties to advance the legislation, all at the expense of the north.

Due to the impasse, the debate ultimately ends without a vote and has been postponed for further deliberations, angering representatives of northern communities.