Israeli Tourist Businesses Need $215 Million of Aid

Tourists cut or canceled vacations due to Gaza conflict.

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Tourists in Tel Aviv. High hotel prices, poor public transportation and the shekel exchange rate are putting them off, according to a Tourism Ministry survey of outgoing visitors.
Tourists in Tel Aviv. High hotel prices, poor public transportation and the shekel exchange rate are putting them off, according to a Tourism Ministry survey of outgoing visitors.Credit: Eyal Toueg

The tourism sector needs assistance totaling 750 million shekels ($215 million) due to damage caused by Operation Defensive Edge, the interministerial committee examining the issue said.

The panel members submitted their report to the director-general of the Prime Minister’s Office, Harel Locker, on Wednesday.

Many tourists cut their vacations short or didn't come to Israel at all, causing “critical economic damage” that the tourism sector cannot handle without financial assistance from the state, the committee report said.

The committee, headed by Tourism Ministry Director-General Amir Halevy, includes representatives of the ministries of finance, economic and interior, the Bank of Israel and the Tax Authority.

The cabinet is expected to decide on the matter next week.

The report recommends granting compensation for loss of revenue to tourism-based companies, regardless of their locations in Israel, and creating a 400-million-shekel fund for the purpose. Companies entitled to file for compensation include hotels and hostels, tour guides, tour vehicles and tourist attractions.

These companies will have to prove that their business dropped more than 20% between July and October, compared with the same period a year earlier. Maximum compensation would be 30% of the gross loss per month.

In addition, tourist attractions will have to prove that at least 30% of their turnover last year was from foreign tourists who are exempt from paying value-added tax. Compensation will be capped at 2 million shekels per company, while hotel chains with more than three branches will be eligible for a maximum of 4 million shekels.

The committee members are also calling for one-time compensation of 80 million shekels for airlines that continued flying throughout the crisis.

Meanwhile, the authorities are trying to determine which agency should compensate kibbutzim and towns that hosted soldiers and residents who fled the south during the operation.

Communities bordering Gaza, including kibbutzim and youth villages, took in thousands of soldiers doing the fighting, at a cost of tens to hundreds of thousands of shekels. Likewise, kibbutzim in the north hosted thousands of residents of the south who fled the constant rocket fire from Gaza.

The Israel Defense Forces is apparently responsible for reimbursing communities for hosting soldiers. But the IDF initially referred the matter to the Defense Ministry, which said it was being handled by the Finance Ministry, which in turn said the Prime Minister’s Office was looking into the issue. The PMO referred the issue back to the Defense Ministry, which then said the IDF was indeed responsible. The IDF Spokesman ultimately said it was examining the matter and would work with the host towns.

Two weeks ago, officials at the National Emergency Authority told TheMarker that staff members were looking into the matter. “You can’t tell a hosting kibbutz, `bear the expense yourself,'” a senior official said.

The Finance Ministry responded that it had offered immediate 4 million shekels of assistance to communities that took in residents of the south.

As opposed to other forms of war-related compensation, such as damage to property or income, officials have not handled this matter in the past, a person involved in the matter said.

In the meantime, it appears that the hosts will be bearing the cost of their goodwill.

The Kibbutz Movement filed a request with the Finance Ministry, asking it to reimburse kibbutzim in the north that hosted Gaza-area residents. These kibbutzim hosted tens of thousands of people at an estimated cost of 1,000 shekels a person. The expense varies depending on how long they stayed, whether the kibbutz offered special activities, and whether it could have rented out these rooms to paying guests.

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