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.

By: Uri Elitzur

Published: January 18th, 2013
Latest update: January 21st, 2013

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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

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.

AND TENS OF THOUSANDS OF RESERVISTS

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.

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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.