Treasury to Fund Pilot Compensation for Businesses Extorted by Protection Rackets

Israel’s Finance Ministry will allocate about NIS 30 million for a new pilot program to compensate businesses harmed by protection racket crimes. The move is described as extraordinary and reflects how deeply the extortion problem has penetrated Israeli commerce, especially in a situation where many businesses are left without effective protection from law enforcement and, in some cases, cannot get insurance coverage.

Under the outline, businesses damaged by extortion threats or retaliation by criminal groups will be able to receive state compensation through a mechanism operated by Israel Tax Authority property tax teams. The stated goal is to encourage business owners to file complaints without fearing financial ruin if they refuse extortion demands. The Finance Ministry said the pilot will run for up to six months, be operated by the Tax Authority because of its expertise in damage assessment, and be financed from the state budget rather than the property tax fund.

Senior Finance Ministry officials sharply criticized the need for such a scheme. Speaking to Calcalist, they said the police should be handling the issue and that the ministry should not have to create a solution from scratch. They called the situation “absurd,” arguing that the pilot exists only because of continuing enforcement failures.

The ministry also says insurers are increasingly refusing to cover businesses under threat, or companies operating in areas where protection rackets are widespread, treating it as a broad and ongoing risk. To prevent insurers from shifting liabilities to the state, the pilot will not apply to companies that cancel coverage only after it takes effect. The article says the government is effectively paying twice, once to fund enforcement and again to compensate for its failure, even though fighting organized crime and protection rackets was a central pledge of National Security Minister Itamar Ben Gvir.