Organized crime costs Israel's economy around NIS 23 billion per year, data shows

Organized crime is imposing a significant financial burden on Israel's economy, costing approximately NIS 23 billion annually and impacting each household with an estimated NIS 8,000 expense, according to a new study by Hashomer Hachadash and the Rifman Institute for Negev Development. The study, which utilized data from the Finance Ministry, Tax Authority, and State Comptroller, highlights that criminal activity, rather than global economic factors, is a primary contributor to the rising cost of living.

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The public in Israel is paying a double tax today, once to the state and a second time to criminal organizations.

The findings reveal that criminal enterprises are deeply entrenched in various industries, including agriculture, construction, and housing. In the construction sector alone, protection rackets can inflate project costs by up to 5%, leading to substantial increases in apartment prices and subsequent rent hikes across the country. Similarly, farmers in the eastern Galilee and Negev regions report widespread extortion and threats, with 93% and 90% respectively experiencing such pressures. Car insurance premiums have also seen a significant rise, up to 56%, due to increased break-ins, thefts, and vandalism.

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Anyone who thinks crime is only a matter of personal security must understand that it has become a driver for the cost of living.

Yoel Zilberman, founder and CEO of Hashomer Hachadash, described the situation as a "national crisis that harms every home in Israel." He argued that citizens are effectively paying a "double tax," one to the state and another to criminal organizations, emphasizing that crime's impact extends beyond personal security to become a major driver of living costs. Zilberman attributed the severity of the issue to a lack of governance and called for state intervention.

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This is not only an issue of internal security, but a national challenge of development, growth and strengthening the periphery.

Haggai Reznik, head of the Rifman Institute for Negev Development, pointed to a "deeper failure" beyond mere price increases, asserting that the government's response must involve a "combination of effective enforcement, civilian regulation and economic tools." He stressed that addressing organized crime is not solely an internal security matter but a critical national challenge for development, growth, and strengthening the country's periphery.

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a combination of effective enforcement, civilian regulation and economic tools that will return responsibility and authority to the state.