Economy
Shock in Kiryat Shmona: The State Demands Businesses Return 238 Million Shekels
A blow to northern businesses: Of the nearly six billion shekels transferred to the city, the tax authority is demanding hundreds of millions back. The municipality threatens to petition the High Court of Justice to stop the decree and is demanding to extend the compensation period until the city returns to normal: 'Let them look at the city and see what's actually happening in it'
· Source: Walla. Photo as published in the article
The tax authority is demanding that business owners in Kiryat Shmona return 238 million shekels in advance payments they received, and in response Kiryat Shmona municipality is opening a legal proceeding against the state and threatening to petition the High Court of Justice if the repayment demand is not canceled.
The tax authority is demanding that business owners in Kiryat Shmona return 238 million shekels, out of nearly six billion shekels transferred to the city's businesses, according to reports. Following this, Kiryat Shmona municipality is opening a legal proceeding against the state of Israel and the tax authority, demanding to cancel the repayment demand and extend the period of recognition of indirect damage to the city's businesses.
The advance payments received by businesses in 2023-2024 were used for wage payments and suppliers, and demands are now being made for their return, according to reports. In June, approximately 35 business owners signed a petition to the municipality requesting action on their behalf, and the municipality sent two documented exhaustion-of-procedures letters that went unanswered.
The legal move, on the initiative of the mayor and municipality management, is designed to protect business owners who were left out of the compensation circle after the tax authority determined that indirect damage in Kiryat Shmona ends on February 28, 2025. The municipality is demanding recognition of ongoing damage from October 7, 2023 until the city returns to its prewar state, and emphasized that it is not the one being harmed and has no compensation claim of its own, but has taken upon itself the struggle for the residents and business owners.
According to reports, business volume in the city dropped from 778 million shekels to 589 million shekels, and net VAT declined from 23 million shekels to 12 million shekels, and the income index in Kiryat Shmona declined by 31 percent compared to only a 4 percent decline in the national average. A business that opened shutters after two years rises anew without regular customers, without workers and with debts that accumulated while the shutters were closed, with the rate of residents' return to the city currently standing at only 55 to 76 percent.
The municipality clarifies that it does not dispute the authority's power to set dates, but the date itself, which was set without individual justification for Kiryat Shmona. 'We did not ask for a favor, we asked them to look at this city with their eyes and see what's actually happening in it,' said Mayor Avihai Stern. 'The business owners here held Kiryat Shmona when everyone was outside. Now it's our turn to hold them. For us the war did not end on a date someone marked in a calendar.' If the letter goes unanswered within two weeks, the municipality will petition the High Court of Justice along with a request for an interim order.
