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The Knesset enacted a law Wednesday night to provide benefits for Israeli residents living within 7 kilometers of the Gaza Strip, including 25 percent income tax breaks. The bill passed as an emergency law valid only for 2007, but it provides tax discounts for people making up to NIS 197,000 a year, to carry on through 2008 upon approval by the Finance Minister and the Knesset Finance Committee.

In addition, employers will enjoy tax exemptions, grade school students will be eligible for free tutoring and teachers living outside the area will receive free transportation to work. The law is expected to cost NIS 200 million annually.

Though the bill passed its second and third readings with a comfortable majority of 78 MKs, commotion broke out when the legislature accepted a reservation to add three moshavim - Ohad, Sde Nitzan and Talmei Eliyahu - and the community of Tzohar to the bill against the government's wishes. The coalition tried to torpedo the reservation, which would add NIS 4 million annually to the tab, arguing that any naming of communities would be struck down by the High Court of Justice.

The bill returned to the Finance Committee, which worked out a compromise two hours later, according to which the reservation would be withdrawn, but the Finance Ministry would submit regulations to the committee within two weeks about which communities need assistance due to security concerns. The compromise allowed the bill to pass without the reservation but with MKs knowing that the four communities discussed would eventually be eligible for benefits.

Finance Committee Chairman Stas Misezhnikov said: "This is a historic moment. For the first time in seven years a comprehensive plan was passed to assist residents of Sderot and the western Negev." He said the law would support both the unemployed and business in the area.