Is Israel Mistreating Gaza Settlers? Or Were Gaza Settlers Mistreating The State?

Is Israel cheating Gaza settlers out of their just compensation? Or were the settlers cheating Israel for many years prior to withdrawal? Ha'aretz reports:

…Has the state really abandoned the evacuees from Gush Katif? They say it has - mainly when it comes to the 700 businessmen from the region. The state is compensating them fairly for the value of their businesses in the Gaza Strip, they say. But, they argue, there is a vast gap between what their businesses were worth there, and what they'd be worth elsewhere in Israel.

In other words, they argue that the fair value for their businesses is not enough to open comparable businesses in Israel.

Now, the state offered each of the 700 the choice among two alternative forms of compensation. The financial avenue was payment of the full value of the business, according to its profits - and any assumptions regarding profit were skewed in favor of the businessman. There is no dispute that people given their full profits and then some were adequately compensated.

The problem is that only about 30 percent of businessmen chose that avenue. The rest will therefore have to settle for the other avenue, based on assets. Why didn't they choose the first option? Because their businesses were losing money. Absent profits, the businessmen were offered compensation based on the value of their assets. Again, valuations were skewed in their favor.

For instance, the government compensated land based on the land values in Ashkelon's industrial zone, not according to the practically nonexistent value of land in Gaza. And the evacuees received compensation even though these business owners took their equipment with them, or sold it to Palestinians (as happened with the greenhouses).

Also, the state is offering grants equivalent to tens of percent of the compensation amount, to help build a new business. According to Sela's own calculations, and those of the Agriculture Ministry, the grants and compensation together rose beyond the cost of a whole new greenhouse, though the greenhouses in the Strip had not been new.

Other businessmen were also offered grants, free land, and exemptions from arnona municipal tax for ten years if they agreed to build their business in the industrial zone by Netivot.

Why, then, do the evacuee businessmen complain that they can't rebuild their businesses? There are apparently two answers.

One, which arises openly in conversation with the evacuees, is that the large proportion of businesses ostensibly operating in the red in Gaza had been misrepresenting their condition for tax purposes. That is why the new legislative proposal suggests a third avenue for compensation, based on the price of a new business inside Israel, irrespective of whether the original business was making money or not.

As for the second answer, Uri Ariel told TheMarker, "It's true that they paid more than the value of a greenhouse in Israel, but that doesn't restore the livelihood the evacuees had. In the Strip they had cheap Palestinian labor, cheap water, and didn't need to heat the greenhouses. Now they don't have all that and their livelihood is hurt."

In his words, he admits to a bitter truism about Gaza: Most of the businesses there had no real right to exist. They were based on land they got for free, water given almost without any charge, cheap Palestinian labor, and an almost absolute holiday from tax. Most of the businesses survived on subsidies from the state and cheap Arab labor, and now they expect the state to continue to give them the same conditions in the real world.

This is also the reason why offers of free land and a ten-year tax break don't satisfy them: Without the cheap Arab labor, the sewing shops of Erez cannot subsist, and to Israel's regret, it can't supply free Palestinians anymore.

Ha'aretz notes the Knesset has passed a bill that will pour another 3 to 7 billion NIS into compensation. Settlers advocates claim that amount is highly inflated. But, as Ha'aretz notes, one provision of that bill gives full retirement benefits to any settler over the age of 46, which itself costs 2 billion NIS.

You have a group of people who lived nearly for free. They had incredible tax breaks, almost free water, amazing subsidies for their businesses and schools. Yet most of those businesses were losing money, even though they relied heavily on cheap Palestinian labor. Worse yet, of the 30% of businesses that were actually profitable, a large number of them declared non-existent losses to cheat on their taxes.

And, to top it all off, the vast majority of these people did not leave voluntarily, and their expulsion cost the state millions of dollars, dollars that could have gone into compensation.

Their rabbis told them to fight expulsion and not to leave voluntarily. Their rabbis told them everything would be fine. Let their rabbis fund their rehabilitation.

Comments

[avrohom]

scotty shygets, convert already to your new religion. you love animals and make yourself ho9ly to repair all the ills of the world...everyone is obligated to save the world even at the expense of itnermarriage...but when it comes to your own brothers and sisters who HAVE BEEN EXPELLED BY THR THOUSANDS FROM THEIR HOMES FOR NO GOOD REASON ONLY TO BRING MORE TERROR AND LEGITIMIZE THE GOVERMENT FO TERROR HAMASTAN AND BRING THE WAR OF LEBANON YOU ROSHO MERUSHO HAVE THE TEMEREITY TO CRITICIZE THEM FOR THEIR DEMANDS...YOU ARE A MUMOR LEHACHISS LIKE A GOY...A SING THAT ALL THOSE WHO ARE "BLEEDING" FOR OTHERS ARE CRUEL TO YOUR OWN! PUT A CROSS AND GET OUT OF THE JEWISH SCENE

[lucky settler]

It's true... anyone who was ever in Gaza saw the grand palaces those settlers had.

Right now, in fact, the caravillas they have are almost 1000 ft2 for a lousy 8 person family (couples get a luxurious 600 ft2 caravan)! Wow!

Between the parasitic haredim and the greedy settlers, it's amazing Israel survives at all. If only they were all communists and socialists like the selfless founders.

Perhaps it's too hard to see reality from up there in the towers of Tel Aviv... or from out there in Minnesota.

[Yos]

George Bush rigged the levee to break! Oops, wrong country, wrong self-pity orgy.

In the area where I live we have a similar dilemma concerning redevelopment of blighted neighborhoods. Most people are happy with what they are offered for their homes, but there's always a few hold outs. Most of those can be reasonably accommodated eventually, but there's always two or three who have a serious problem, which is this: They bought their house years ago, before the prices went up, so their mortgage payments are very low. However, the price of houses are sky high, even with the slump in sales. These people don't have enough credit rating to buy a new house at the current rates and higher payment levels, when you consider all their moving expenses, down payments, utility hookups, payoffs for their cars (required by the mortgage co. to lower their monthly payments to a certain percentage of their income), etc., will have to come out of what they make from their old house, and it's not enough, basically, to overcome their past mistakes and make them homeowners again. So basically, the question is, they had the status of homeowners when they started - is it right for the state to make them renters against their will? That is basically stealing from them. Or should the state shut up and cough up whatever money it takes to solve their problem - which is far more than their original property is worth? it's the same type of situation. There's really no good answer.

[rejewvenator]

I'm not an expert in Israeli business tax practices, but from what I hear, many Israeli businesses, whether located in Gaza, the West Bank, or Tel Aviv, do their best to never show a profit. It's a simple economics lesson. High business taxes depress the incentive to show a profit, and the ability to write off many expenses against earnings means that Israelis report low personal incomes and no business earnings, even as they maintain richer lifestyles than those numbers indicate. In essence, they are re-adjusting the effective tax rate.

What's unfortunate is that the cheap overhead and labor in Gaza did not have an incubator effect and did not generate many promising new businesses. In the US, many young businesses creatively avoid minimum wage-and-benefit laws by paying cash or hiring illegal aliens, but in the US, this has become an engine of growth for small businesses.