The Ministry of Finance will reexamine its policy regulating compensation to businesses indirectly damaged by the recent Guardian of the Walls operation and the surrounding unrest. The current regulations hold that only businesses within 40 kilometers of Gaza — that is, about as far North as Ashdod — are eligible for compensation for indirect economic damage. This reevaluation comes in the wake of extensive criticism by the Histadrut, economic officials, and members of Knesset.
According to reports, regulations submitted on Monday for final approval by the Finance Committee will contain a compensation mechanism for any business forced to close due to Home Front Command guidelines. (The Home Front Command is responsible for civil defense and issues guidelines restricting gatherings in particular regions of the country during periods of expected rocket fire.) The regulations will also discuss compensation to businesses that have closed due to the violent incidents and rioting in mixed Jewish-Arab cities.
Why was such a widespread public outcry necessary before the Ministry of Finance and the Tax Authority would consider expanding the compensation scheme to include businesses outside of the 40-kilometer range surrounding Gaza? Last week, they explained to the Finance Committee that what was holding them back was not the money, but the precedent such a decision would set.
“We have not broken [this policy] since the  Second Lebanon War,” Eran Yaacov, head of the Tax Authority, said, “and I remember it coming up in all the discussions in the committees I was on. Ninety percent of the alarms during working hours were within the 40 kilometer range. It is important to look at what lies ahead.”
Itai Temkin, who serves in the Budget Department at the Ministry of Finance, added: “The resilience of the home front is also financial resilience. A radical change in the status quo in compensation means a dramatic jump in the cost per day of combat. In light of coming events, we need to ask ourselves what impact this will have on the resilience of the home front, including the financial aspect. Would this method of distribution be sustainable for next time and for longer operations?”
In other words, Yaacov and Temkin fear that paying for this model of compensation won’t be possible during future wars. They are certainly correct to expect more wars, and the resilience of the Israeli home front is indeed a serious matter. But the more important question is, when the next war does take place, what the Israeli public will be able to expect in terms of financial support.
The Israeli public needs to know that if the Home Front Command requires an employee to stay at home due to the lack of a fortified shelter in the workplace, that employee can and should stay at home. No Israeli should have to balance both the fear of missiles and the fear of harm to their salary.
One of the clear lessons learned from the COVID-19 pandemic is that there is a direct link between the public’s willingness to follow guidelines and their confidence that they will receive monetary compensation for lost income.
A problematic practice has developed in Israel that during rounds of fighting, discussion of compensation is treated as taboo. This silence leads Israelis to feel less comfortable following the Home Front Command’s guidelines. The precedent that Yaacov and Temkin discuss, according to which Israelis would know that financial compensation will eventually reach all those who have lost income, is the minimum condition under which the public can be expected to act in accordance with the government’s instructions.
Concerns about Israel’s “economic robustness” or lack thereof paint a misleading picture. When Israel’s actual economic capacity is not calculated and its limits are simply assumed, situations arise such as a lack of budgetary attention to compensation for families of fallen soldiers or victims of terrorist acts. The compensation for such victims therefore does not come from the current state budget but from a non-budgetary fund, the main source of which is property tax.
The property tax fund currently sits at 15 billion shekels. The estimated cost of the damage from Operation Guardian of the Walls is about 4 billion shekels: 2 billion shekels in direct damage to population centers throughout the country, and 2 billion shekels in indirect damage within a range of up to 40 kilometers from Gaza.
The Tax Authority representatives did not mention the cost of removing the 40-kilometer limit for indirect damage compensation at their presentation to the Finance Committee, despite the request of the committee’s chairman, Moshe Gafni, and other members of the Knesset.
If the Ministry of Finance genuinely understands that the change in compensation policy would have a catastrophic effect, despite the 15 billion shekels currently in the property tax fund, they can raise the tax or find additional sources of funding.
Moreover, even if the fund is depleted, the budget can and should reinforce something that is essential to the contract between the state and its citizens: if your wages or property were harmed because you live in Israel, the State of Israel will compensate you.
The bottom line is simple, and except for those in the Treasury, there is unanimous agreement between Knesset members, workers’ organizations, employers and manufacturers: if the Home Front Command instructs workers to stay home, the state should compensate them. At the very least a clear precedent should be set to that effect.