The Ministry of Finance is proud that for the first time during fighting businesses throughout Israel will be compensated for loss of income and not just in certain locations. This is true but in previous operations, businesses within a range of 40 kilometers of Gaza were entitled to full compensation, while this time only those within seven kilometers are entitled. All the rest will receive reduced compensation, so many settlements between seven and 40 kilometers from the Gaza border will receive grants in the current war at a lower rate than they received in smaller operations.
The grant formulated by Minister of Finance Bezalel Smotrich is intended for any business whose income in October was hit by more than 25% compared to the corresponding period last year. The grant includes partial refunds on the fixed expenses of the business and participation in paying employees' salaries.
This anger towards Minister of Finance Bezalel Smotrich's plan was expressed during a stormy debate in the Knesset Finance Committee today. The plan came under fire from MKs, business representatives and even Minister of Economy and Industry Nir Barkat. Representatives of Israel's south said that the government has also abandoned them economically.
Eshkol Regional Council head Gad Yarkoni said, "I just got a note that all my residents in Eilat have been notified in the hotels that they should leave and vacate the rooms." Yarkoni requested the immediate intervention of the Minister of Finance, who was not present at the meeting, as well as none of the senior officials in the ministry who signed the aid outline for the economy.
Knesset Finance Committee chairman MK Moshe Gafni left the discussion to try to address the problem with the Ministry of Finance. It seems that the state has not yet made commitments to some of the hotels and this is effecting the evacuees.
On state aid, Yarkoni spoke about property tax compensation. "Don't start telling me this was new and that was old, people left their houses with only the clothes they were wearing. Think of all the businesses and agriculture that died in those seven kilometers. I ask you, MKs and ministers, make sure we get paid what we lost."
Sedot Negev regional council head Tamir Idan said, "The state is taking care of the evacuation of residents within a range of up to seven kilometers from the fence. We have people at a slightly greater distance, and we evacuated people at our own expense. I have to pay with money I don't have. For my part, I will be arrested later, but I cannot abandon the residents. I am expected to make a selection of which families to contact and which not. I was with the Minister of Finance this morning and I told him this."
Idan demanded that the Ministry of Finance, "behave generously this time. The state violated the agreement with us. Understand that if there is no solution for Gaza and an economic solution, there will be no region here. People will not be willing to return."
Expenses not saved, while income lost
One of the criticisms in the business sector towards the Ministry of Finance plan is about the limitations introduced into the formula for calculating the compensation. According to the outline, a business with the highest level of damage, one that has actually been shut down since the outbreak of the war, is entitled to a refund of 18% of its fixed expenses.
Why was the threshold set at 18%? The Ministry of Finance believes that this is the rate of fixed expenses that a business cannot save even if it is closed. In other words, the Ministry of Finance assumes that a business would save more than 80% of expenses, since it would not consume electricity or water, and would not have to stock up.
However, business sector leaders estimate that the rate of expenses that cannot be saved is twice the maximum compensation of the Ministry of Finance, at about 35%. Rent expenses, property tax, professional insurance, communication bills - all of these continue even while the economy is at a standstill.
Published by Globes, Israel business news - en.globes.co.il - on October 23, 2023.
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