Finance Committee authorizes tax breaks for periphery

Residents of 402 towns will now receive the benefit, as opposed to 182 previously.

Protests against proposed changes to the criteria for periphery residents to receive tax benefits, October 2015. (photo credit: Courtesy)
Protests against proposed changes to the criteria for periphery residents to receive tax benefits, October 2015.
(photo credit: Courtesy)
The Knesset Finance Committee on Tuesday unanimously approved the standards for towns in the periphery to receive a lower income tax rate.
The outline, proposed by Finance Committee chairman Moshe Gafni, remained very similar to his original plan, despite weeks of protests and political debate, leading Prime Minister Benjamin Netanyahu to freeze progress on the matter until after the budget passed last week.
“We have reached the best outline that could be achieved, out of concern that as many towns as possible can enjoy the tax benefits without overly harming towns that already received the break,” Gafni said.
According to the new standards, residents of 402 towns will receive the benefit, as opposed to 182 previously.
Towns that receive the tax break must have fewer than 75,000 residents and be close to a border and beyond certain northern, southern and eastern lines on the map – with the exception of the western Negev, including towns near the Gaza border.
The committee approved a point system, and residents of towns that match the geographic criteria and have at least 25 points proving socioeconomic need receive the benefit. The points are allocated according to socioeconomic ranking, “peripheralness” and proximity to a border.
Towns with 25-49 points will get a seven percent tax break for annual salaries up to NIS 132,000; towns with 50-59 points get a discount of 10% for yearly pay up to NIS 162,000; and with 60-100 points, 12% for earnings up to NIS 192,000.
Anyone whose tax benefit will be reduced as a result of the new plan will receive partial compensation in a temporary measure approved by the Finance Committee.
Four towns outside of the map will also receive a tax break: Kiryat Gat, Kiryat Malachi, Upper Nazareth and Migdal Haemek.
“Today we proved that as public representatives we know how to make decisions, Gafni said. “We approved an outline that will stand up to any legal test and will provide justice to residents of the periphery.”
Deputy Construction and Housing Minister Jackie Levy called the authorization a “historic moment.”
“The list of towns that receive the benefit grew by over 180… We made a decision that strengthens the Negev, Galilee and Jordan Valley,” he stated.
MK Tali Ploskov (Kulanu), former mayor of Arad, who was involved in recent protests by periphery mayors, called for people to move from the center to the periphery. “This is a day of celebration for the North, the South and all of Israel,” she said.
MK Haim Jelin (Yesh Atid) said “developing the periphery is necessary. This is a first-rate national interest – meant to create equal opportunities and give the tools for every child and resident to break the glass ceiling and meet his or her potential.”
MK Itzik Shmuli (Zionist Union) said the tax benefit was “necessary like air to breathe to strengthen the periphery, and it is good that this saga is behind us.”