Just as the spring tourism season is getting underway, the Red Sea resort of Eilat has announced it will shut down entrances to the city next Wednesday as a protest against a government plan to impose a new sales tax.
Mayor Meir Yitzhak Halevi said in a statement Thursday the move would “devastate the city” and “reduce tourism by 20 percent.”
Eilat is currently a tax-free zone, in part as compensation to residents for the costs of living so far from the rest of the country.
The city has been a hot spot for both domestic and international tourism for years – but that situation could change if prices in Eilat rise due to the addition of a new VAT (value added tax, or sales tax).
In the rest of Israel, sales tax is 17 percent – but Finance Minister Yair Lapid (Yesh Atid) has proposed raising that to 18 percent, and applying the new hike to Eilat as well.
The measure would cause “grievous injury” to city residents, contended Halevi, who said hotels in his city would not be able to compete with those in the rest of the region.
A publicity campaign is planned to fight the measure, he said, and next week’s city council meeting is to be held Wednesday at one of the closed city entrances.