Eilat struggling to recover from impact of war

Eilat is struggling to recover from the economic blow dealt by the war, according to data published by Shva, Israel's national credit card payment system company, which monitors credit card payments in Israel. The city has been transformed from a tourism resort to a haven for evacuees.

Although the level of consumer spending in the Red Sea resort is improving, Shva data show that in the week of December 17 to December 23 credit card payments were 30% lower than in the corresponding week of 2022.

Eilat Mayor Eli Lankri has asked the ministry of finance to enact a special compensation plan for the city and the issue was even discussed last week by the Knesset Finance Committee headed by MK Moshe Gafni (United Torah Judaism). During the Knesset discussions, Lankri presented data to show that unemployment in Israel's southernmost city had leapt from 3.4% to 14% since the start of the war and that the credit card data showed it was the worst hit city in the country. Lankri claims that the Ministry of Finance has dismissed his request for aid to the city and said, among other things, that it "held insignificant discussions, and wrote us off. They claim that the city is no different from the rest of the country."

However, the Ministry of Finance insists that examinations related to the city are complicated because of its VAT exempt status and that from checks conducted on individual businesses as well as in the framework of advances for compensation, it emerged that there is no difference between the performances of businesses in Eilat and businesses in the rest of Israel, and therefore the general outline plan for compensation provides an answer to the city's plight.

Later this week, a meeting has been arranged between Eilat Mayor Lankri and Minister of Finance Bezalel Smotrich on the question of whether Eilat will receive additional aid.

"There is no doubt, as the data show, that apart from border settlements in the north and south, Eilat is in the most challenging economic situation in Israel, with no substantial improvement trend, as in the rest of the country, and with improvement expected only when tourism returns to the city," says tax consultant Yaron Gindi, president of the Institute of Tax Consultants.

Gindi adds, "This situation requires the Ministry of Finance to lead an improved and unique plan for businesses in Eilat over the coming months as well, in order to keep Eilat businesses as viable businesses and growth engines of the city, when the fighting ends. I took a taxi in Eilat, and the driver showed me his total take for December - just NIS 3160. That says it all."

Published by Globes, Israel business news - en.globes.co.il - on January 2, 2024.