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Israel’s Enormous Financial Benefits from the Settlements

All this talk about the billions spent on settlements being the reason there's no good welfare in Ofakim and sufficient education in Ramat Hasharon is based on two enormous lies.

A view of the settlement of Efrat, south of Jerusalem, between Bethlehem and Hebron. with more than 8,000 middle class residents, this town pays exorbitant taxes in return for government services, like any other middle class town in Israel.

A view of the settlement of Efrat, south of Jerusalem, between Bethlehem and Hebron. with more than 8,000 middle class residents, this town pays exorbitant taxes in return for government services, like any other middle class town in Israel.
Photo Credit: Nati Shohat/FLASH90

Labor chairwoman Shelly Yachimovich has said that as long as there is no political arrangement between Israel and the Palestinians, the state must continue to budget the settlements, because their residents are Israeli citizens who have not broken any laws and are deserving of services like any other citizen.

That simple acknowledgement set fire to the thorny fields of the left and renewed the old diatribes about the billions that are being invested in the settlements, which are the source of all our troubles. For me, this provides an opportunity to speak, once and for all, in a calm and logical manner on this issue

About 400 thousand Israeli citizens are living in the towns and villages of Judea and Samaria, almost half of them children. If we were to suppose that Peace Now chief and current Labor party Knesset candidate Yariv Oppenheimer had served as prime minister since 1967, and that, to this day, not a single settlement had been erected – where would all these people be living today?

Some would have settled in the Negev and Galilee, and some in Jerusalem and Tel Aviv. Would the state then not have been providing them with schools and kindergartens and clinics and community centers? Would they have not been needing an infrastructure and roads? Let’s suppose that there are no settlements and never have been, and the school for the 500 children in Ofra were constructed not in Ofra but in Tel Aviv – are you certain it would have come out cheaper?

I believe it would have cost a whole lot more.

It’s true that water and sewer infrastructures cost more in distant settlements, but if those had been built in the Negev and Galilee, for the population that currently resides in Judea and Samaria, it wouldn’t have cost any less. Even in Tel Aviv, despite the shorter supply lines and the infrastructure that is supposedly in place already, I’m not so sure the state would have saved all that much.

If we were to suppose that there were no Jewish settlements in Judea and Samaria at all, and 100 thousand of the settlers would have opted to live in Tel Aviv – how much extra would the state have been allocating over 40 years to burden those creaking infrastructures with an additional 100 thousand human beings? Maybe it would have come out cheaper to settle them in the empty Samaria?

I don’t know the answer to that. But that which has actually taken place can be figured out accurately. That which would have happened can barely be postulated. Perhaps it would have cost a little more or a little less, but, overall, the government wouldn’t have transferred the bulk of the money it has invested in the settlements to other needs. If there were no settlements in the world, the state would still have needed to provide the same services and erect the same infrastructures for the same people – elsewhere.


All this talk about the billions spent on settlements being the reason there’s no good welfare in Ofakim and sufficient education in Ramat Hasharon is based on two enormous lies.

The first lie is the absurd assumption that had there been no settlements, the people living in them would not have existed elsewhere. The second lie is comparable to the wailing of the defendant who killed both his parents and asks for mercy because he’s an orphan: The money has already been invested, the settlements established and the roads paved. Now come the fans of “disengagement” and say, Let’s burn it all down, destroy everything and build those same structures from scratch for the evicted residents. It might cost 200 million shekels, but it’s worth it for the sake of peace.

I can understand their position, even though in my view it is mistaken and disconnected from reality. But what I fail to understand is the insolence of these people, who propose to demolish and burn down all those billions already invested, and spend additional billions anew – and they blame the settlers for all the economic woes of Israel.

The settlers are saying don’t destroy and don’t waste any more billions, and the left is saying destroy and burn and pour out billions more – so which of them is threatening the state’s ability to take care of welfare, education and economic opportunity?

And, please, don’t tell me that each day the settlements remain in place causes the hemorrhaging of funds, and so it’s better to destroy them and pay out a large sum of money to stop the hemorrhaging, once and for all. That’s just a lie. No hemorrhaging of funds is taking place in the settlements, other than services the state is extending to the taxpayers of Judea and Samaria, just as it is obligated to do anywhere else.

Also, while we’re discussing taxes, it’s time to do some reverse thinking, as in: how much money do the settlers give the state?

Allow me to do some basic, primitive math: 400 thousand settlers mean, give or take, 80 thousand households, and it is commonly accepted that these are lower middle class people, sixtieth to seventieth percentile.

Let’s imagine the average settler family as a household in which both husband and wife work and bring home 15 thousand shekels ($4,000) a month after taxes. That puts their gross income at 22 to 23 thousand shekel (around $6,000), and the state has clipped from their paychecks between 7 and 8 thousand shekels (around $2,000). Then come their indirect VAT (sales taxes) on daily purchases, gasoline taxes, taxes when they buy a new car every 4 years – that should eat up 20% of their taxed income, which means that this couple is paying the government 10 thousand shekels ($2,700) a month, or 120 thousand shekels a year ($32,000).

Multiply by 80 thousand households and you’ll get 10 billion shekel ($2.69 billion) annually.

But Judea and Samaria also has a highly developed business sector. According to the Gush Shalom list, it features 151 industrial plants, as well as several commercial agricultural farms. This sector pays out income tax, corporate tax, employer tax and several more fees and municipal taxes, in accordance with the Israeli system.

In addition there are thousands of small businesses – restaurants, stores, coffee shops, garages, carpenters, gas stations, vineyards, banks, artisans, contractors, attorneys, dentists – and they, too, pay income tax and employer tax beyond what they pay as householders.

And there are hundreds of public institutions – schools, kindergartens, yeshivas, vocational schools, colleges, a university, clinics, regional and municipal councils and city halls, and they all employ tens of thousands and pay employer tax and a huge amount of VAT on everything they purchase, from notebooks and computers to cars and buildings.


My apologies for imposing all that math on you, but you’ll have to admit that by the roughest estimate, the country’s income from businesses and other employers in Judea and Samaria are at least as high as its income from the area’s households. Which leads us to conclude that the settlers pay the state between 20 and 25 billion shekels ($5.38 to $6.72 billion) annually.

It’s nothing out of the ordinary, no reason for bragging. It’s what the state collects from any other comparable middle class area that features industry, agriculture and business. Still, when we discuss the billions the state is spending on the settlements, we should mention the fact that the state also receives many billions from the same settlements.

But there is something about which the settlers should feel free to brag: according to the IDF Spokesperson’s office, one third of the army reservists reside in Judea and Samaria. It means that 5 percent of the population contribute 33 percent of the IDF reserve duty.

That, too, belongs in the discussion of the billions being spent on the settlements, because a population that pays the government more than 20 billion shekels a year, and gives the IDF tens of thousands of reserve soldiers, should not feel ashamed when it receives a new kindergarten or a clinic or a club for the elderly.

It has even earned to right to a paved road to take them home.


This article first appeared in Makor Rishon in Hebrew.

About the Author: Uri Elitzur was Benjamin Netanyahu's bureau chief during the his first tenure as prime minister. Elitzur, a resident of Ofrah, is the deputy editor of the popular Israeli newspaper Makor Rishon.

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One Response to “Israel’s Enormous Financial Benefits from the Settlements”

  1. Gil Gilman says:

    Another pet ketch turned to kvell.

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All this talk about the billions spent on settlements being the reason there’s no good welfare in Ofakim and sufficient education in Ramat Hasharon is based on two enormous lies.

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