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Israel cities end strike, turn to courts to block government's tax plan

Israel's Finance Minister and leader of the Religious Zionist Party Bezalel Smotrich attends a meeting at the parliament, Knesset, in Jerusalem on March 20, 2023 [GIL COHEN-MAGEN/AFP via Getty Images]

Israel's municipalities, on Thursday, ended a three-day strike and said they would instead turn to the courts to try to block a government plan to reallocate their tax income, Reuters reports.

The dispute is over a proposed fund that would dip into commercial property taxes collected by municipalities. The fund would then be distributed nationwide as an incentive to build more residential property.

The government says it will help alleviate a housing shortage and lower costs that have soared over the past 15 years due to strong demand and limited supply. The city halls say it is an intrusion of federal authority, harms their local budgets, and is based on false Finance Ministry data.

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Many of the biggest and wealthiest cities in Israel went on strike on Monday, shutting schools for a day and suspending services such as trash collection, over the Finance Ministry's plan.

The Federation of Local Authorities said it would now go to court to block the creation of a nationwide property fund.

Explaining the change in tactics, the municipalities said they want to "hurt the government, not the residents".

"The fund does not achieve the goals for which it claims – addressing the housing crisis," the Federation said.

"Local governments … demand the state present a real plan to solve the housing crisis to bring down housing prices" with incentives to expand housing starts.

The fund is part of a law accompanying the 2023-2024 state budget that must be approved in parliament by 29 May. Finance Minister, Bezalel Smotrich, said on Monday that he would not give in and that the property tax fund would be passed.

The budget was approved this week by parliament's finance committee and awaits final ratification.

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