Likud pushes costly tax break for Beersheba ahead of election

Ahead of the election, Likud is advancing a bill that would restore tax breaks for Beersheba at an estimated annual cost of 600 million shekels. The move follows pressure from Beersheba Mayor Rubik Danilovich, who said Prime Minister Benjamin Netanyahu personally promised him he would work to bring the benefits back to the city.

The effort has gained support from some opposition lawmakers, but it comes as the coalition has recently approved tax breaks for Nof HaGalil, Ashkelon and settlements in Judea and Samaria. Another proposal, to extend tax benefits to Golan Heights communities, is expected to come before the Knesset Finance Committee on Monday.

The Finance Ministry is strongly opposing the Beersheba initiative. 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 not been shown to attract new residents and mostly help existing, relatively strong residents who are unlikely to leave anyway.

The ministry also said the benefits favor higher earners because the tax relief rises with income, and could weaken incentives for people to move to smaller peripheral towns, which are the intended targets of such policies. Officials noted that the government has already approved a 1.16 billion shekel strengthening plan for Beersheba, and said the proposed annual cost lacks a budget source, which they say violates the Budget Foundations Law and means the government should not back the bill.

The ministry added that even though the tax break is framed as a temporary three-year order, past experience shows such measures are very hard to cancel once granted. It warned that approving it for Beersheba could trigger demands from other cities and regions, increasing budget pressure at a time when defense spending and reconstruction needs are already driving costs higher.