With elections approaching, Likud is promoting a bill that would restore tax breaks for residents of Beersheba at an estimated annual cost of 600 million shekels. The move follows strong pressure from Beersheba Mayor Ruvik Danilovich, who says he received a personal promise from Prime Minister Benjamin Netanyahu that the discounts would be returned.
The push gained momentum after the coalition recently advanced tax breaks for Neve Shalom? No, for Nof HaGalil, Ashkelon, and settlements in Judea and Samaria. Another proposal, to grant tax breaks to communities in the Golan Heights, is due to come before the Knesset Finance Committee tomorrow. Some opposition lawmakers are backing the Beersheba initiative.
The Finance Ministry strongly opposes the plan. In a position paper prepared by the Tax Authority and the ministry's chief economist and sent to the ministry's legal adviser, officials argued that tax breaks have proven ineffective, do not attract new residents, and mainly go to long-time residents who were unlikely to leave anyway. They also said the benefit favors higher earners, since the discount grows with income, and that extending it to a large city like Beersheba could weaken incentives to move to smaller peripheral towns.
The ministry further noted that the government has already approved a 1.16 billion shekel strengthening program for Beersheba, and said the proposed annual cost lacks a budgetary source, which it argued violates the Budget Foundations Law and should prevent government support. Officials added that although the benefit would be a temporary three-year order, past experience shows such measures are very hard to cancel once granted. They also warned that approving Beersheba could trigger similar demands from other cities and regions, increasing pressure on a state budget already strained by heavy defense spending and reconstruction needs.
