Kiryat Shmona Sues Israel Over Business Compensation
The Kiryat Shmona municipality announced Wednesday it is initiating legal proceedings against the State of Israel and the Tax Authority. The city is demanding an extension of the period during which businesses are recognized as having suffered indirect damages, arguing that the current cutoff date of February 28, 2025, is insufficient.
The municipality, led by Mayor Avichai Stern, stated the lawsuit aims to protect hundreds of business owners who will be excluded from compensation. The Tax Authority's determination that indirect damages in Kiryat Shmona end on February 28, 2025, is contested, as businesses have not yet returned to full operation since the October 7th attacks. The city argues the damage is ongoing and should be recognized until the city fully recovers to its pre-war state.
The municipality clarified it is not a taxpayer and has no personal claim, undertaking this fight solely for its residents and business owners. It provided data showing a significant drop in business turnover from NIS 778 million to NIS 589 million, and a decrease in net VAT from NIS 23 million to NIS 12 million. The city's revenue index fell by 31%, compared to a national average of 4%.
Business owners face further hardship as advances received in 2023-2024, used for salaries and suppliers, are now being demanded back. Approximately thirty-five business owners petitioned the municipality in June for assistance. The city sent two documented letters seeking resolution but received no response.
Mayor Stern emphasized that the city does not dispute the Tax Authority's right to set dates but contests the specific date chosen without individual consideration for Kiryat Shmona. He stated, "We didn't ask for a favor, we asked them to look at this city with open eyes and see what is actually happening there. The business owners here held Kiryat Shmona when everyone else was outside. Now it's our turn to hold them."
The municipality warned that if its letter is not answered within two weeks, it will file a petition with the High Court of Justice, requesting an interim order.
