Municipality strikes over 'City Tax Fund' to continue until Thursday

A strike by more than a dozen municipalities that began on Monday will continue until Thursday, the Federation of Local Authorities in Israel said Monday. The federation shut down numerous services on Monday to protest the government’s City Tax Fund plan.

Municipal preschools and services related to schools would not close, however, so that “parents and children will not be held hostage by the finance minister,” the federation said.

The City Tax Fund, known as the Arnona Fund, is part of the Economic Arrangements Law, which is scheduled to pass along with the 2023-24 budget by May 29.

The fund will appropriate a percentage of the earnings of wealthier cities from their taxes on commercial real estate and reallocate the funds to every housing unit that is marketed, no matter where. By doing this, the government hopes to incentivize both wealthier and poorer cities to invest in housing instead of commercial real estate, thereby raising the supply of housing and eventually lowering home prices.

Opposing the fund

Opposition MKs and the federation oppose the fund. They say it serves as an excuse for the government to eventually use the funds for other purposes, it will lead to the financial collapse of some municipalities, and it is discriminatory toward Arab-Israeli municipalities.

Among the municipalities that went on strike on Monday were Tel Aviv, Haifa, Ashdod, Rishon Lezion, Modi’in, Herzliya, Ramle, Ramat Gan, Givatayim, Ashdod, Kfar Saba, Ra’anana, Tiberias, Givat Shmuel, Ramat Hasharon, Holon, Beersheba, Netanya, Shoham, Or Yehuda, Kafr Kassem, Umm el-Fahm, Tira and Rahat (with the exception of schools), Walla reported.

Among the services shut down were public preschools, garbage collection, sanitation, security at elementary schools, public reception at municipal offices and parking fines in blue-and-white parking spaces.

Additional steps announced by the federation include freezing municipal planning and construction committees, freezing building permits and freezing large-scale construction agreements.

The federation said it would turn to the courts to challenge the bill if it passes and refuse to send money to the fund.

“We will not be the tax collectors of the State of Israel’s Finance Ministry on the backs of our residents,” the federation said.

The Knesset Finance Committee continued to vote on thousands of revisions that the opposition filed in an attempt to stall the bill. There were intense confrontations, including shouting matches among local authority leaders who attended the session, opposition MKs, coalition MKs and committee chairman Moshe Gafni (United Torah Judaism). Yesh Atid MK Idan Roll was removed from the session.

Roll said his removal was a violation of Knesset protocol, since MKs may not be barred from voting. Gafni let Roll return after the commotion died down, and the voting continued.

Addressing the issue

National Unity chairman Benny Gantz on Monday said the program was a “de facto tax hike” based on “sectorial and geographical” considerations. All local authorities that will be forced to contribute to the fund will need to compensate by either raising residential city taxes or by canceling services, which residents will then need to pay more for, he said at a press conference.

Opposition leader Yair Lapid said: “Theft is a strong word, but I have no other. The government is coming and seizing money from local authorities, whose only sin is that they are managed well and whose residents work and pay taxes.”

“The Arnona Fund is not a fund; it is robbery in broad daylight,” he said, adding that this characterized the entire budget, which was a “distribution of plunder by an irresponsible government that is extorting a weak prime minister. The local authorities’ strike is unquestionably justified, and we support it.”

Finance Minister Bezalel Smotrich and Federation of Local Authorities in Israel chairman Haim Bibas, the mayor of Modi’in-Maccabim-Re’ut, reportedly reached agreements last week over the bill. But Bibas on Sunday retracted his agreement, saying he only agreed because his back was to the wall because the fund was about to be approved by the committee.

Smotrich on Sunday said Bibas had been pressured by special interest groups into changing his mind, without providing details.