Smotrich defends tax redistribution plan, criticizes ‘harmful’ strike

Opening his Religious Zionism party’s faction meeting at the Knesset, Finance Minister Bezalel Smotrich attacks municipalities currently striking in protest of his plan to redirect some municipal tax revenues to poorer localities, saying that the strike is the “wanton and irresponsible decision” of certain mayors who cannot handle the government’s financial policy.

“Today, Israeli residents in some cities across the country have suffered an unnecessary and harmful strike” as a result of “a number of mayors who are unable to adequately deal with the decision of the Israeli government and the Finance Committee to establish the housing fund,” Smotrich says.

The fund, which will pool a portion of commercial municipal taxes and redistribute money from central, wealthier cities to more remote and less commercially well-off ones, is billed as a way to incentivize housing. Detractors say it unfairly taxes localities that invested in building economic infrastructure, and that it will hurt their ability to provide education, social and other municipal services.

Currently, West Bank municipalities are legally blocked from paying into the fund, but they can benefit from it, Finance Ministry Director General Shlomi Heizler said this morning in an interview with Army Radio.

“The fund is the right thing for the State of Israel and all its residents,” Smotrich says, reiterating that the municipal tax shave will be approved later today as part of the Arrangements Bill accompanying the 2023-2024 state budget, despite vociferous opposition from a number of Israeli mayors and from opposition politicians.

Mayors have attended Finance Committee meetings over the past two months to pressure against the measure, including two stormy debates yesterday and today. The coalition is continuing to push the plan forward and will bring it for a plenum vote next week, according to Smotrich.

The finance minister also pledges to battle against market concentration and monopoly power, two pillars of Israel’s high and rising cost of living. Nevertheless, the state budget does not attack the structural foundation for these issues, for which Smotrich has received considerable criticism.