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A recent disagreement between employers and the Finance Ministry is delaying the finalization of the agreement on compensating businesses in the North for losses due to the war for August. The negotiators for this second agreement - the first was for the month of July - are Finance Ministry Budgets Director Kobi Haber, Israel Tax Authority Director Jackie Matza, Manufacturers Association President Shraga Brosh and Zeev Weiner, the president of an umbrella organization for the self-employed.

Agreement has been reached on the two-track approach for calculating compensation, according to either 160 percent of salary costs (compared to only 132.5 percent in the agreement for July), or according to a percentage of the difference between revenues in August 2005 and in August 2006.

The disagreement between the treasury and the employers' organizations is over the percentage amount.

The Finance Ministry wants to use 50 percent across the board, while the Manufacturers Association and the self-employed organization want to use 50 percent for large businesses, and a graduated scale from 60 percent to 80 percent for smaller businesses (according to the principle of the smaller the business, the bigger the percentage).

In addition, the employers' organizations want the improved terms (relative to the agreement reached for war-related losses in July) to be applied retroactively to the month of July as well. The Finance Ministry rejects this demand.

The employers' organizations are also demanding a third option, called the "red track," according to which any business owner could submit detailed financial reports to the tax authorities to serve as the basis for calculating compensation payment. The disadvantage of this alternative, implied by its name, is that completing the calculation and payment process is liable to take a long time, months or even years.

The treasury's representatives also rejected the demand by Histadrut labor federation chair Ofer Eini to award a special hazard bonus to those employers who showed up for work during the war.

"If the Property Tax Authority personnel who visited Katyusha-hit communities received bonuses for risking their lives, then other workers deserve similar bonuses," Eini says.

Former MK Ehud Yatom, who was appointed by Minster of Trade and Industry Eli Yishai to study the post-war needs of businesses in the North, has proposed suspending VAT in the North for six months to a year.

The proposal was a response to the treasury's loan plan, which northern business owners say will not meet their needs. Yatom also suggested lower credit card fees charged to businesses.

Histadrut labor federation (Clalit) rival Histadrut Leumit opposes the larger labor union's recent proposal that all Israeli workers contribute the equivalent of a day's salary for the welfare of residents of the North who were affected by the war.

In a letter sent yesterday by Leumit head Yitzhak Russo to his Histadrut Clalit counterpart, Eini, Russo said that while collecting contributions for residents of the North was a positive measure that would improve the mood and economic well-being of the recipients, "the decision to compel workers to make a donation is inappropriate because it is a substitute for imposing a tax."

Russo says that instead of compelling workers to contribute, Eini's union should instead appeal to individual trade unions to ask members in each workplace to raise funds equivalent to one day's salary for each employee or more, on a voluntary basis.

"If worker contributions are viewed as compulsory, the entire mission will miss its target," Russo argued.

Russo said that if Eini agrees to a voluntary donation scheme, Leumit would join in. Russo also criticized Brosh for proposing a matching-funds scheme, according to which all factory owners would promise to donate a sum equal to the amount contributed by their workers. Major industrialists in the Manufacturers' Association blocked Brosh's measure on the grounds that the contributions must be voluntary rather than compulsory.

Eini's and Brosh's proposals could raise as much as NIS 500 million. Low-income workers would be exempt from making donations.

Pleasure cruise companies are seeking compensation for war-related losses on the same basis as other tourist accommodation businesses. Caspi Cruise and Mano Cruises are among the companies demanding payment for lost income as a result of the war in Lebanon.

"A ship that functions as a floating hotel and which is 100-percent based in Israel, and whose custom is 100-percent Israeli, deserves to receive the same compensation as a hotel," Caspi Cruise CEO Yuval Caspi says.

According to Caspi, reservations dipped by over 10 percent during the war. While the figure does not appear to be particularly dramatic, in order to prevent it from dropping further Caspi cut its prices by as much as 30 percent.

The safe, pastoral image of the Galilee was another casualty of the war in the North, as demonstrated by the dozens of people who canceled contracts to purchase homes in the region. According to real estate agents in the Galilee, even stiff cancelation fees, ranging from NIS 10,000 to NIS 200,000, depending on the stage in which the deal was killed, have not kept some potential buyers from deciding against a move to the North.

Industry sources say that only massive government intervention in the form of advertising campaigns and cash rebates can bring buyers back to construction sites and sales offices.

One person in the industry charged that instead of working to encourage settlement in the Galilee, the government is working against that goal, citing the decision to suspend laying a rail line from Haifa to Carmiel: "Instead of helping these communities, the government is only hurting them. We believe in the Galilee but without state aid, people will leave," he said.