The Ministerial Committee for Legislation is set to discuss today a bill by MK Shalom Danino, of Likud, that would grant a tax benefit to Beersheba residents. The initiative follows a wave of similar tax-break legislation for localities, including Ashkelon, Nof Hagalil, and dozens of settlements in the West Bank. Treasury professionals are rejecting the proposal outright, and the Tax Authority, the Chief Economist’s Department, and the Budget Department estimate it would cost NIS 600 million a year.
Despite the Finance Ministry’s opposition, the bill has wide political backing. Alongside Danino, it is signed by Likud MKs David Bitan, Ofir Katz, Keti Shitrit, and Nissim Vaturi, Shas MK Yinon Azoulay, and opposition lawmakers, especially four members of Yisrael Beiteinu, Ofer Forer, Yulia Malinovsky, Sharon Nir, and Evgeny Sova. Yesh Atid MK Yasmin Friedman, who lives in Beersheba, also signed the bill, which critics say was effectively tailored for the city’s residents.
Because the Supreme Court previously struck down local tax benefits as personal legislation, the bill avoids naming Beersheba directly. Instead, it grants a 10% income tax credit, up to taxable income of NIS 180,000, to residents of an “urban locality with metropolitan influence.” The definition is meant to capture the metropolitan core, but it adds three conditions designed to exclude Jerusalem, Haifa, and Tel Aviv: five years of negative internal migration, more than a quarter of the settlements within 30 kilometers already qualifying for tax benefits, and a socioeconomic or peripheral ranking of 5 or lower.
The Treasury says the bill sets a dangerous precedent and could trigger broader demands from other large cities, leading to significant additional state revenue losses. It notes that by 2025, 15% of Israelis already qualified for locality tax benefits, at a total annual cost of about NIS 2.8 billion. Officials also argue the scheme does little to attract new residents: a Bank of Israel study from 2015 found that 77% of the benefit stayed with existing residents, 13% went to people using false registration, 6% went to movers between eligible localities, and only 4% went to people who moved from ineligible areas.
The ministry says Beersheba is too large, as the ninth-largest city in Israel with about 220,000 residents, while the legal norm is not to grant such benefits to places with more than 85,000 residents. It also warns that extending the break to a strong metropolitan city would weaken incentives for remote communities, including the Gaza border area, by making it easier for families to stay in a big city and still get the tax advantage. The ministry adds that less than a year ago the government approved a dedicated NIS 1.16 billion package for Beersheba to develop an innovation district, cyber labs, and transportation infrastructure, which it views as the proper tool for strengthening a metropolitan city.
