During a follow-up discussion in the Knesset Finance Committee, Eilat Mayor Eli Lankri noted on Tuesday that unemployment figures in the southern city jumped to 14% from 3.4% before the war, and that credit figures in the city are the lowest in the country. Lankri warned that the situation was deteriorating, and attacked the Finance Ministry: "They held idle discussions, they belittled us, they claim that the city is no different from the rest of the country." On the other hand, the Ministry of Finance argued that the examination in the city is complex in the absence of the VAT component, and that examinations conducted regarding various individual businesses as well as in the framework of advances for compensation, revealed that there is no difference between the businesses of the city of Eilat and the other businesses in Israel, and that the general outline provides a response to the situation.
Eilat Mayor Eli Lankri, Photo: Yehuda Ben Yattach
Opposition and coalition Knesset members attacked the Finance Ministry's position, saying it was inconsistent with reality. The discussion presented an outline formulated by the Legal Advisor to the Knesset, according to which a city with a high absorption rate of evacuees would be included within the framework of the red track adapted to frontier communities, and a proposal was made to include the city's businesses within the framework of the green compensation track. Committee Chairman MK Moshe Gafni called on the Finance Ministry to provide a solution before the committee embarks on a legislative process: "We are not leaving the city of Eilat, anyone who compares Rishon LeZion to Eilat is doing an injustice."
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Sharp increase in the unemployment rate
At the beginning of the discussion, Gafni said: "Eilat geographically is far away, the reality is that the city is collapsing economically, we cannot stand by and say that there are general regulations, they do not solve the problems."
City representatives presented the city's unemployment figure, which stands at 14%, while since the outbreak of the war, this figure has risen sharply by 10.6%, while on the eve of the disaster in the envelope, at 6.10, the figure was 3.4%. They also showed that according to data from S.B.A., in the week of December 3-9, the decline in credit data in Eilat was the highest among the country's cities, with a decline of about 42% in credit card spending.
The promenade in Eilat is empty of tourists, photo: Yehuda Ben Yattach
The mayor also noted that the forecast he presented in a previous discussion regarding the deterioration of the economic situation in the city has come true: "It will continue for the next three months, Eilat lost this winter, everything was canceled. Come and see what's happening there, see the empty promenades, what's happening in the commercial centers. Since the previous meeting, nothing has happened. The chairman of the committee instructed the Finance Ministry to come up with an improved outline for the city of Eilat - this did not happen. Duration for several days. We presented unequivocal data that in Israel there is a recovery, while in Eilat the trend of deterioration continues. This should not surprise anyone, there is no tourism and no expectation of tourism. We asked the treasury to offer something, bring something, bring paper, I haven't seen a single proposal."
20 Hotels at risk of closure
Lankri also warned that hotels would close soon: "The evacuees will leave, we will reach tens of unemployment rates, fifty, sixty percent, it will cost the state millions, let's do something, moderate what is happening in the city. What is a conspiracy? Do you have any other data? Obviously, there is a business in Tel Aviv that has also dropped by 60%, but it's like that throughout the city of Eilat. If it was just October, I wouldn't have come here, November continues, December, January is expected to continue and deepen."
A woman carrying toys at a hotel in Eilat to which evacuees from Kibbutz Nahal Oz were evacuated, photo: AFP
Philip Azard, CEO of the Eilat Municipality, added: "Today there is a farewell event for the Nir Oz evacuees, which means that in another week and a half the Red Sea Hotel has closed. 20 hotels will close As soon as Sderot residents leave, we will see thousands increase in unemployment. We show macro data on the economy in Israel and Eilat, we held talks with the Ministry of Finance, we passed on the data, we proposed an outline, we did not receive a single written reference. They think that only the outline they proposed is correct and there is nothing wrong with it. We're not like any other city."
Pursuant to the committee chairman's instruction in the previous hearing, the committee's legal advisor, Adv. Shlomit Erlich, presented a legislative outline of the Knesset Legal Advisor, based on cities that host a particularly high percentage of evacuees – at a rate of 40% of the city's residents and with a decrease of at least 30% in business turnover – that will enable them to integrate into the red track of the compensation regulations. The outline is also based on the fact that the city of Eilat is threatened from a security point of view, similar to the frontier settlements.
The Ministry of Finance claimed that it found no difference between businesses in Eilat and other businesses in Israel regarding the amount of damage, and sought to separate the state of the city itself from the state of business there.
Long-term injury
The Knesset members attacked the remarks made by representatives of the treasury, claiming that the treasury refuses to compensate the city and abandons it. They also noted that while in other cities this is a two-month hit to businesses, in Eilat there is talk of a long-term damage of at least six months, and that the city of Eilat is unique when it is based entirely on tourism, unlike other cities.
Knesset members from the coalition and the opposition noted that the city's representatives presented clear data, and that the mayor of Eilat was "forced to come like a beggar," and that if the concept of the treasury remained in place, they would advance legislation in the Knesset on the matter. Opposition members attacked the finance minister and called on him to come to Eilat and see its condition.
Yaron Gindi, the Israel Tax Advisers Association, commented on the issue: "I understand the difficulty of the Tax Authority because there are no VAT reports, the Tax Authority does not have all the data, so they take businesses from a sample. But S.B.A. is an independent system, the system's data is given by week, you see a significant flight of the other cities in Israel compared to the city of Eilat in credit data, that's indisputable."
Shai Aharonovitch, Director General of the Tax Authority: "Eilat is exempt from VAT, sampling the data is more difficult, there were quite a few meetings with the minister himself, there were meetings with the mayor as well as internal meetings. It is clear to everyone that there is uniqueness, we have a tax assessor in Eilat who samples a number of businesses in each field, we compensate backwards, the forward outline will have to be examined retroactively. It may be that in December the recovery in Eilat is different from the rest of the country, but we will have to examine January. As far as the Finance Minister is concerned, Eilat is very important, the credit card companies' data are not easy to analyze, because some of the chains are not cleared in Eilat."
Moshe Gafni. Finance Committee, Photo: Omer Messinger
Gafni prepares the law for plenary debate
Subsequently, the Ministry of Finance presented data according to which according to advances paid in the declines in Eilat and Rishon LeZion, the extent of the declines among businesses in the two cities is similar. The Knesset members rejected this, noting again that Eilat should not be compared to other cities in the country, and that it is not possible to rely on a partial examination, while the city presents comprehensive data regarding the percentage of decline, including data from credit card companies and data from S.B.A. Alongside the bill, which was drafted according to an outline that would include the city in the red compensation track, it was proposed alternatively to allow the businesses of the city of Eilat to be included in the green compensation track in the compensation regulations.
Committee Chairman MK Gafni summed up the discussion: "I don't recall such a consensus among Knesset members about a city where there is no argument that you are wrong. You are attached to an outline that is good, but Eilat must be different. Until there is a solution, I would like to take the bill and sign the members. We are not leaving the city of Eilat, I have been carrying this for a long time and everyone was sure that I would come today with a solution that you would agree with. I am preparing the law and I will bring it to the plenum, it is in your hands."
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