Legislation backed by Finance Minister Bezalel Smotrich granting expanded tax benefits to dozens of West Bank settlements is expected to come up for final votes in the Knesset as early as Monday, even as the government delayed a long-promised NIS 5 billion ($1.78 billion) aid package to rehabilitate northern communities that remain under near-daily bombardment from Hezbollah.
The decision to release the aid money was initially supposed to be made on Sunday, but was pushed off until Tuesday, according to Hebrew media reports, due to Smotrich’s insistence that legislation by Religious Zionism MK Zvi Sukkot to grant additional tax benefits to dozens of West Bank settlements and a handful of northern communities under a new “security threat” criterion, also be advanced.
The finance minister has reportedly been delaying the release of the approved funds until his party’s legislation, set to be voted on in the Knesset this week, is passed. The move has led opposition lawmakers to accuse Smotrich of prioritizing West Bank settlements and ultra-Orthodox communities over the needs of the war-battered north.
Northern leaders have repeatedly protested that the critical emergency aid remains frozen within the Finance Ministry — a situation worsened by subsequent budget cuts that stripped millions from the region’s active recovery funds — and their communities have accused the government of abandoning the devastated region.
The issue has also provoked division within the coalition itself as National Security Minister Itamar Ben Gvir berated both Smotrich and Prime Minister Benjamin Netanyahu on Sunday for delaying the long-promised aid for northern communities, in an unusual public criticism of the prime minister by a senior coalition minister.
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“While residents of the north are facing existential threats, the prime minister and finance minister have once again postponed a decision regarding the north,” said Ben Gvir, calling it “unacceptable” that essential aid continues to be delayed due to “political foot-dragging.”
A member of the security forces surveys the scene where a Hezbollah rocket hit the northern city of Kiryat Shmona, May 30, 2026. (Michael Giladi/Flash90)
“The responsibility for delaying the plan lies at your doorstep,” he said, directly addressing Netanyahu and Smotrich, and calling the delay “a major mistake.”
Negev and Galilee Minister Yitzhak Wasserlauf, also of Ben Gvir’s Otzma Yehudit party, said he has warned Netanyahu that northern conflict-zone communities are “on the verge of collapse” and urged the government to approve extensive tax benefits for residents.
Smotrich vetoes expanding area of eligibility
The division highlighted by the Otzma Yehudit lawmakers was also on display during a marathon Finance Committee debate last week, when committee chair and Likud MK Hanoch Milwidsky said he had sought to expand tax benefits to communities within nine kilometers of the border, but that Smotrich vetoed the proposal.
“I tried to convince [the Finance Ministry] that there should be no distinction between the 0-2 kilometer line and the 0-9 kilometer line in the conflict border area. Unfortunately, the finance minister vetoed the matter,” said Milwidsky.
Local authority heads from the North argued that limiting eligibility for aid to communities within two kilometers of the border would leave the vast majority of conflict-zone communities without additional assistance.
“Either all of us are included, or none of us are. We are no one’s punching bags,” Mateh Asher Regional Council head Moshe Davidovich told lawmakers on Thursday.
In the heated discussion, Sukkot accused northern mayors of “blackmail” for opposing legislation to grant benefits to West Bank settlements, prompting outrage from the committee.
“You should be ashamed. We are bleeding in the north,” responded Eldad Yogev, a farmer from the moshav, Shomera.
Israeli security forces and civilians at the scene where a Hezbollah rocket hit the northern city of Kiryat Shmona, May 30, 2026. (Eyal Margolin/Flash90)
Approximately 60,000 northern residents were displaced by Hezbollah’s attacks on the north between October 2023 and November 2024.
More than 8,000 rockets were fired from Lebanon into Israel during the 2023-2024 Israel-Hezbollah war, along with hundreds of drones and anti-tank guided missiles. The Hezbollah-led attacks on Israel resulted in the deaths of 46 civilians and 80 soldiers until a ceasefire was reached in late November 2024.
The ceasefire has now significantly eroded, with northern communities experiencing constant attacks from Hezbollah rockets and drones.
Sukkot’s original tax benefits legislation did not include any northern communities and instead focused exclusively on West Bank settlements, including Kedumim, where Smotrich lives. As the finance minister’s Religious Zionism party draws much of its support from the settlement movement, the legislation has prompted criticism from opposition lawmakers who have accused Smotrich of effectively funnelling money to his base.
In an effort to gain support from the ultra-Orthodox parties to advance the legislation, several Haredi communities in the West Bank were added to the initial draft of the tax breaks bill, followed by northern communities within 2km of the Lebanese border, representing a tiny fraction of northern residents under sustained fire.
Finance Minister Bezalel Smotrich (right) and Binyamin Regional Council head Israel Ganz admire plans for a new highway connecting the West Bank settlements with central Israel, February 24, 2026. (Courtesy Binyamin Regional Council)
Yesh Atid MK and finance committee member Vladimir Beliak and other opposition lawmakers argued that Smotrich agreed to amend the original bill to include communities within two kilometers of the Lebanese border to “exploit the plight of northern residents” by linking tax incentives for the northern communities to the legislation, making it easier to advance benefits for settlements.
“There has never been a more brazen and aggressive legislative ambush in the Finance Committee than MK Zvi Sukkot’s bill to grant tax benefits to Judea and Samaria,” Beliak told the Times of Israel on Sunday, referring to the West Bank by its biblical name, adding that the government “continues to trample upon every norm of proper governance and dismantle the state budget.”
The changes to include the Haredi communities and those in the north drew criticism from the Finance Committee’s legal adviser, who argued that adding the additional communities after the bill had already passed its first Knesset reading in March amounted to a fundamental alteration of the legislation.
That, in addition to the absence of any professional opinions from the Justice and Finance Ministries, is likely to leave the legislation vulnerable to a High Court challenge if it is ultimately enacted.
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