The State Prosecution on Sunday instructed the police to investigate Upper Nazareth City Councilor Ze'ev Hartman on suspicion of incitement to racism.
The move comes after a complaint was filed in April against Hartman, who called for the city's Arabs to "disappear," in an Independence Day greeting to local residents.
Councilors had been asked record personal greetings for Israel's 61st Independence Day to be aired over the holiday.
When the camera reached Hartman, he stated his wish for "all the Arabs to disappear." The cameraman, reportedly stunned by the statement, asked Hartman if he was being serious, to which he replied "absolutely serious."
Following Hartman's remarks, Upper Nazareth's spokesman for Arab Affairs, George Shahada, took the recording and lodged a complaint of racism and incitement with local police.
The state prosecution said several complaints of inciting racism and violence had been filed against Hartman in the past, but he was never indicted.
In 1998, the Tzomet-Gesher-Moledet party was banned from running in Upper Nazareth municipal elections after a similar complaint was lodged against Hartman, who ran on the faction list.
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