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Some of the most prosperous communities in the north of the country, including Kfar Vradim and the city of Nahariya, could soon lose income tax breaks that were awarded by the state to their residents.

Conversely, for the first time, Arab towns in the Negev and Galilee regions will be added to the list of communities that receive tax breaks.

All of this is apparent from recommendations being formulated by an interministerial committee examining the criteria under which tax breaks are awarded in outlying communities.

The tax breaks include tax credits of 13-25 percent of the salary.

Therefore, if someone earns NIS 10,000 gross per month, and he lives in a community entitled to a 13-percent tax break, he will receive a NIS 1,300 discount on his income tax payments.

Up to now, the benefits have been given according to no clear criteria. This meant, for example, that a Jewish town in the north would receive a tax break, while the neighboring Arab town did not.

The problems with giving out the tax breaks without criteria were revealed a year ago, when the state decided to add all of the settlements around Gaza to the list.

During discussion in the Knesset, MKs added four other towns to the list that are nowhere near Gaza, including Arad and Beit She'an. Following this, an Arab town filed a petition with the High Court of Justice, claiming discrimination.

The attorney general agreed with this claim and announced that he would not defend the case.

The state then committed itself to determining criteria for the awarding of tax breaks.