By Pesach Benson • September 23, 2026
Jerusalem, 23 September, 2026 (TPS-IL) — The Kiryat Shmona Municipality is preparing to petition the High Court of Justice against the State of Israel and the Tax Authority, seeking to extend the period during which businesses in the northern city can receive compensation for indirect economic damages caused by the war.
The Tax Authority has set Feb. 28, 2025, as the end of the compensation period for Kiryat Shmona. The municipality argues that the date does not reflect conditions in the city, saying many businesses have yet to fully reopen while others have not resumed operations.
The northern Israeli city of Kiryat Shmona on Sept. 5, 2024. About 21,000 residents — roughly 87% of Kiryat Shmona’s prewar population — were evacuated during the war amid daily Hezbollah rocket attacks. Photo by Yoav Dudkevitch/TPS-IL
The municipality is seeking recognition of continuing economic damage from Oct. 7, 2023, until Kiryat Shmona returns to its pre-war economic conditions. It emphasized that it is not seeking compensation for itself but is acting on behalf of residents and business owners.
According to municipal figures, business sales turnover fell from NIS 778 million ($258 million) to NIS 589 million ($195.3 million). Net value-added tax receipts declined from NIS 23 million ($7.63 million) to NIS 12 million ($3.9 million), while the city’s revenue index fell 31%, compared with a 4% decline nationally.
About 21,000 residents — roughly 87% of Kiryat Shmona’s prewar population — were evacuated during the war amid daily Hezbollah rocket attacks. The municipality said between 55% and 76% of residents have since returned, leaving a reduced customer base for local businesses. Businesses that have reopened after extended closures are facing accumulated debts, staff shortages and the loss of regular customers, it said.
The municipality also raised concerns about advance payments made to businesses in 2023 and 2024 to cover salaries and supplier costs. It said some business owners are now being asked to repay those funds despite having already used them to pay employees and cover other expenses.
About 35 business owners signed an appeal to the municipality in June. The municipality said it subsequently sent two notices stating that it had exhausted the available administrative process but received no response.
“We didn’t ask for a favor; we asked them to look this city in the eye and see what is actually happening here,” Mayor Avichai Stern said. “The business owners here kept Kiryat Shmona going while everyone else was away. Now it is our turn to Support them.”
If the state does not respond within two weeks, the municipality said it will petition the High Court of Justice and seek an interim injunction.
