Municipalities in Israel ended a three-day strike on Thursday, stating that they will resort to the courts in an attempt to obstruct the government's plan to redistribute tax allocations. The dispute revolves around a proposal to create a fund that can draw from the commercial property tax collected by municipalities and distribute the funds across Israel as an incentive to build more residential properties. The government believes the fund will help alleviate the housing shortage and reduce costs that have risen over the past 15 years due to strong demand and low supply.
Municipal councils argue that "this federal intervention harms their local budgets and is based on incorrect data from the Ministry of Finance." The Union of Municipalities stated that "the fund does not achieve the goals it claims... addressing the housing crisis," adding that "local governments... are demanding the state provide a concrete plan to solve the housing crisis to reduce housing prices."
The fund is part of a law accompanying the state budget for 2023-2024, which must be approved by parliament by May 29. Finance Minister Bezalel Smotrich affirmed that he would not succumb to pressure, and the property tax fund will be included in the 2023-2024 budget law. The finance committee in parliament approved the budget this week, pending final approval.
