Israel Opens Compensation Track for Businesses Targeted by Protection Extortion
Israel launches a 35 million shekel pilot offering state compensation for businesses and farmers suffering property damage after refusing extortion demands.
Starting Thursday morning, a two-month temporary window will open allowing business owners and farmers to claim compensation for property damage caused by extortionists after refusing to pay protection fees. This government pilot, led by Finance Minister Bezalel Smotrich, was approved in June and will be operated directly by the Tax Authority's Property Tax division, similar to compensation for victims of hostilities.
The initiative aims to support businesses targeted by extortion that lack insurance coverage for protection-related damages. Under the framework, the state will provide a financial safety net for direct property damage resulting from extortion, encouraging owners to cooperate with law enforcement. A mandatory requirement for receiving compensation is filing an official police report regarding the extortion and the resulting damage.
The Scale of the Extortion Crisis
A State Comptroller report from April 2026 highlighted that protection rackets severely harm the economy. Data based on a survey by the Contractors and Builders Association in the Tel Aviv and Center District showed that 87% of contractors nationwide have been forced to pay protection money. Many business owners avoid filing complaints due to fear of immediate retaliation, compounded by insurance companies excluding extortion and arson damages from policies.
Finance Ministry officials noted that the effectiveness of the pilot will be evaluated to ensure a safer business environment. When the framework was initially revealed, senior ministry professionals criticized the police and the Ministry of National Security, arguing that massive budget increases have not translated to security on the ground.
"Despite the huge budget allocated to the police as an addition over the past two years, it is failing miserably in eradicating the phenomenon of protection. Now the taxpayer has to pay for this incompetence," officials stated.
Government Safety Net and Pilot Budget
The track opens with a budget of 35 million shekels for a two-month test period to assess its efficacy. Finance Minister Bezalel Smotrich urged business owners not to yield to criminals, stating that the state stands behind them and is extending a financial safety net to victims of protection rackets across the country.
