Israeli National Planning Council Repeals Mandatory Revenue-Sharing for Regional Employment Zones, Entrenching Economic Gaps Between Jewish and Arab Municipalities

On 2 September 2025, the National Planning and Building Committee rejected an objection submitted by Adalah – The Legal Center for Arab Minority Rights in Israel, the Arab Center for Alternative Planning, Sikkuy-Aufoq, and the National Committee of Arab Mayors. The decision upholds Amendment 45 to the Northern District Master Plan (TAMAM 45/9/2), removing a key mechanism that enabled Arab local authorities in Israel to demand partnership in Regional Employment Zones.

The amendment cancels a provision that was introduced following a landmark 2001 objection filed by Adalah and the Arab Center for Alternative Planning. As a result of that objection, a mandatory clause was introduced stipulating that no new or expanded Regional Employment Zone could be approved unless it was established as a joint project, accompanied by a revenue-sharing agreement between participating local authorities. 

Regional Employment Zones are large-scale hubs that include factories, office complexes, logistics centers, and commercial facilities. Because they generate substantial non-residential business tax (arnona) revenues, they serve as engines of economic strength and financial independence for municipalities. The mandatory partnership mechanism enabled Arab towns to require inclusion in such zones and to benefit from regional economic growth. Amendment 45 removes this binding requirement. Instead, planning committees are now only required to “study” the potential impact on neighboring authorities or “examine” whether cooperation exists — without any obligation to ensure partnership or revenue sharing.

The objecting organizations emphasized that this amendment perpetuates systemic discrimination and exclusion. Arab towns in the North have suffered for decades from a severe shortage of employment zones, a lack of land allocation for economic development, and insufficient land reserves due to discriminatory planning policies. The data presented in the objection reveals the depth of this inequality:

• Arab local authorities represent 49% of the population but control only 13% of the land.

• Israeli Jewish regional councils control 77% of the district's land and generate NIS 1,879 per capita in business taxes—six times more than Arab towns that earn just NIS 313 per capita.

• Despite 45 regional employment zones existing in the district, Arab participation in their revenues remains limited and disproportionately low (often between 6.5% and 25%).

The objection noted that while the 2001 decision had not closed the economic gap, it remained a fundamental legal and planning instrument for Arab towns. By removing this mandatory "gatekeeper," the state is stripping Arab municipalities of their only effective tool to challenge their exclusion from regional economic growth.

The National Committee justified its decision by arguing that revenue-sharing constitutes a “budgetary” matter under the authority of the Ministry of Interior, rather than a “planning” issue. It stated that such matters fall within the jurisdiction of the Geographic Committees operating under the Ministry of Interior, which are empowered to redraw municipal boundaries and allocate resources among local authorities. On this basis, the Committee approved the amendment. Adalah maintains that this decision abdicates the state’s responsibility to address longstanding structural inequalities against Palestinian citizens of Israel and instead entrenches them.

    Click here to read the objection [Hebrew]

    Click here to read the decision [Hebrew]