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Photo: Yossi Dos Santos
Eilat Mayor Meir Yitzhak Halevy
Photo: Meir Ohayon
Eilat 'ready for war' over VAT plans
Eilat factions unite to stop looming VAT exemption cancellation; 'VAT spells Eilat's end,' pleas mayor; 'We'll hit the streets,' says commerce official

Israel's southernmost city of Eilat is in uproar over reports its VAT exemption may be cancelled in the looming budget cuts proposed by Treasury Minister's Yair Lapid.

 

"The treasury men who support cancelling the exemption apparently also want the economic and social annihilation of the city," Eilat's Mayor Meir Yitzhak Halevi contended.

 

"They are completely ignorant of what this decree will mean for Eilat," he added.

 

Yitzhak Halevi has personally appealed to Prime Minister Benjamin Netanyahu and demanded his intervention, saying that the VAT will only decrease revenues for the State.

 

"I'm sure that justice and the need to help Eilat's residents will win the fight," said Yitzhak Halevi optimistically.

 

But merchants and residents are far less diplomatic when it comes to the metaphorical sword over their heads.

 

"A catastrophe is looming," said Danny Lahav, chairman of the Eilat's Chamber of Commerce.

 

"We'll hit the streets and stop everything. Eilat's 50,000 residents, big and small, will not allow the VAT exemption to be cancelled," he said. "We're ready for war."

 

Free trade zone

In the mid 80s a free trade zone was established in Eilat, but over the years the zone's different benefits gradually eroded, with the result being a slow but sure northward flow of residents.

 

Cancelling the VAT exemption, Eilat's officials claim, may be a critical hit from which the city may never recover.

 


"בלי הפטור ממע"מ אין לעיר זכות קיום" (צילום: מאיר אוחיון) 

A beach in Eilat (Photo: Meir Ohayon)

 

Therefore, the city council's different factions have joined forces in effort to counteract the measure using reports and studies which supposedly prove the exemption's cancellation will not save the State any money.

 

Eilat's Deputy Mayor Eli Lankri claimed that research have shown that though the State may save some NIS 400 million ($110 million) by cancelling the VAT, half of that sum is from real estate development, which will be brought to a standstill once the tax is in place.

 


שכונת צאלים באילת. "בלי הפטור, מי יבוא לגור בעיר?" (צילום: מאיר אוחיון) 

Ze'elim neighborhood in Eilat (Photo: Meir Ohayon)

 

The VAT will also lead to a radical reduction in private consumption, said Lankri, 60% of which is from tourists: "Hundreds of businesses will shut down and the State will end up losing money. Cancelling the exemption will turn Eilat into Israel's costliest city."

 

Yitzhak Halevy and Lankri have already met with Treasury officials, trying to avert the measure, and even called for a restoration of some of city's free trade zone's benefits.


"משמעות ביטול הפטור: סגירת מאות בתי עסק" (צילום: מוטי קמחי)

"We'll go to the streets" (Photo: Meir Ohayon) 

 

As previously mentioned, Eilat's residents are far more worried than their leaders regarding their benefits' abolition.

 

According to belligerent Lahav, cancelling the exemption will dissolve any motivation to live in Eilat: "From a city of 25,000 residents we grew to 60,000 thanks to only one thing: That there's an exemption that benefits residents.

 

"Once you take away the benefit," warned Lahav, "this city has no right to exist."

 

"We have to be aggressive, not give up for a moment, stay on guard," he insisted.

 

Though it may sound far-fetched, Lahav's suggestion for his city may serve as a measure of the citizens' determination: "We have to disengage the city from Israel. Demand our independence.

 

"We don't want anything to do with this hairbrained country. This city has no choice. We just give and get nothing in return." 

 

 

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