Report Estimates Annual Subsidy for Arab Sector at $11 Billion

A new analysis by C14, drawing on research from the consulting firm Sheldor and official data, estimates that the annual subsidy attributed to Israel's Arab sector amounts to approximately 40 billion shekels (about $11 billion USD). This figure translates to roughly 19,000 shekels per capita.

The analysis updates and expands upon previous data, calculating the fiscal gap between taxes paid by Arab households and government expenditures on services and benefits. According to the underlying Sheldor data from 2019, an average Arab household paid about 10,250 shekels monthly in taxes while receiving approximately 15,300 shekels in government services, creating a monthly deficit of over 5,000 shekels per household. When extrapolated to all Arab households, this resulted in a deficit of around 25.6 to 25.8 billion shekels annually in 2019.

The C14 analysis incorporates economic growth since 2019, updating the fiscal deficit to approximately 30 billion shekels. Additionally, it includes an estimated 5.6 billion shekels for the cost associated with non-military service, based on a proportional calculation used for the Haredi sector, adjusted for the Druze population that serves in the IDF. A further component is the five-year plan for the Arab sector, which allocated about 13.1 billion shekels by the end of 2024, averaging roughly 4.4 billion shekels per year for 2022-2024.

Combining these elements, the total estimated annual subsidy reaches about 40 billion shekels, with a potential range of 37 to 42 billion shekels depending on the calculation assumptions. The report highlights that while a similar figure of 36 billion shekels for the Haredi sector has become a prominent public discussion point, the comparable figures for the Arab sector have remained largely unexamined.

The report clarifies that the 40 billion shekel figure is not an official publication by Sheldor or the Israel Democracy Institute but a calculation derived from their published data and expanded to include additional components.