Redefining Spatial Planning and Development in Israel

1. Assessment and Recommendations

Introduction

The effective regulation of spatial development is essential due to its impact on public goods such as environmental quality, public infrastructure, and service provision. As development and land use decisions are inherently long-term in nature, a forward-looking and coherent approach to spatial development ensures sustainable growth while mitigating unnecessary long-term costs due to uncoordinated decisions. Spatial planning and development is an essential policy tool to balance competing land use demands and optimise economic and social well-being. These processes typically involve the formulation of long-term, publicly accessible plans, which guide and regulate future activities and direct public investment.

Key elements include the formulation of development objectives, coherent plans and the mobilisation of resources for their implementation, as well as robust coordination between development actors. The plans, policies, and projects undertaken within this framework aim to achieve diverse government objectives, such as promoting economic development, improving housing access, reducing regional inequality, and supporting specific industries. For Israel, security objectives are also prominent. Furthermore, spatial planning and development plays a critical role in achieving environmental objectives, including to align national actions with international commitments, such as those related to climate change, biodiversity, and land degradation.

Spatial development also needs to continuously respond to changing reality on multiple territorial scales and sectoral scopes. Accordingly, it requires engaging key players and partners in a shared conceptual framework. It needs to integrate a broad perspective for successful regional development, including spatial planning, the management system supporting policy development and implementation and their role for the spatial allocation of resources.

In OECD countries, spatial planning and development occurs at multiple levels, including the national, regional, and municipal, with an estimated 100 000 individual development plans in place. While these development plans can provide a transparent framework for guiding development, fostering business investment, and sustainable development setting up a coherent spatial planning and development framework is a considerable challenge. It requires integrating diverse, sometimes competing objectives, into coherent spatial visions, to avoid inefficiencies in land-use decisions, defining the roles of all levels of government. Enhanced coordination, inter-municipal agreements, and capacity-building initiatives support the efficiency and coherence of spatial planning efforts. To address these complexities, governments also engage in direct investments and strategic interventions, such as providing infrastructure and social housing, to achieve spatial outcomes that are beyond the private sector’s capacity. Spatial planning and development is therefore an essential tool for the optimisation of space to achieve balanced, sustainable, and socially desirable outcomes. Since land use and infrastructure decisions are long-term and typically difficult to reverse, it is important they integrate long-term objectives while making room for adaptation to local conditions and communities’ needs, integrating their preferences.

Box 1.1. The definition of spatial planning and development

The term spatial planning and development is used in this study as a broad framework for the planning and management of spatial resources within a territory, in particular land. It can be defined as a set of governance practices used largely by the public sector to influence the future distribution of activities and resources (including capital, labour, infrastructure, and natural resources) in space. Spatial planning and development frameworks can encompass statutory and strategic land use planning, economic development, legal frameworks, policy implementation and multilevel governance institutions, among others.

Key considerations for effective spatial planning and development

Strategic prioritisation of spatial planning and development

Poor prioritisation in spatial planning and development can lead to inefficient land use, lost productivity and suboptimal spatial development outcomes. For example, developing peripheral regions to provide housing can lead to greater sprawl and increased overall built-up area while also increasing travel times and car dependency. These outcomes are not intentionally created, or desired, but are the consequence of important development considerations being omitted from government decision-making processes.

Prioritisation and the setting of strategic spatial planning objectives is important for coherent and efficient spatial development outcomes. A clear ordering of priorities can give greater prominence to particular activities, rationalise development patterns, and reduce inefficiency. For example, if reduced greenhouse gas emissions and economic growth were deemed to be the highest national priorities, the pattern of development could be shaped to achieve these objectives at the lowest possible cost. Such an approach, where national priorities are defined and published, can greatly assist the decision-making processes of governments as they seek to achieve development that balances a variety of social, economic and ecological considerations.

The role of decentralisation in managing spatial development

The decentralisation of administrative powers is a continuing trend across the OECD. This trend has shifted various spatial planning and development responsibilities, such as drafting plans, assessing proposals, and coordinating agencies, from national to subnational governments, enhancing the role of regions and local authorities. This is also true in relatively small countries. In countries like Estonia, Latvia, and Lithuania, reforms over the past three decades have expanded the involvement of municipalities and introduced additional spatial scales, including regions, to complement national frameworks. This shift is evident in both federal and unitary countries where local authorities enjoy varying degrees of autonomy.

Decentralisation can better address the diverse interests and needs of local populations and allow policies to be more responsive and tailored to specific local contexts. It can also be an opportunity to better coordinate spatial development with other policies such as transport and service provision, which tend to be locally oriented. However, while decentralisation awards regions and local governments more autonomy to better shape their own outcomes, it also presents challenges, particularly if subnational governments lack capacities, funding, or legal powers, potentially complicating and diminishing the efficiency of spatial outcomes.

The importance of the regional dimension in spatial planning and development

Strategic spatial planning and development at the regional level is crucial as it helps manage co-ordination between different levels of government and address cross-jurisdictional challenges that cannot be effectively tackled at the local level. Effective regional coordination is essential to overcome barriers such as fragmented development, misaligned land-use decisions across local jurisdictions, and as a result inadequate management of spatial development. Regional development plans can set targets, establish priorities, and hold stakeholders accountable, thereby fostering a coordinated approach to addressing complex spatial challenges. Whether an intermediate, regional government level exists or not, taking a functional perspective to regional development and planning is useful. This coordinates spatial planning and development across municipalities that are economically integrated. Ireland, in the absence of such a formal intermediate tier of government, has adopted the 2018 National Planning Framework, which divides the country into three distinct regions and adopts a place-based approach that shifts focus from redistributing resources away from Dublin to optimising each region’s unique functional spaces and promoting organic growth. As a larger, federal country, Germany has an intermediate regional government layer. The Rhine-Neckar functional region in south-west Germany, which straddles two states (Länder) has implemented a "layered-network" governance management model involving municipalities, the private sector, and local institutions to coordinate spatial policy, addressing development challenges through a cross-state treaty, standardised regional plans, and a combined land-use information platform.

Regional development plays a pivotal role in addressing region-specific disadvantages and tailoring development strategies to the unique needs of each area. National frameworks, while generally effective, may not always align with the diverse priorities of individual regions due to variations in industrial structure, geography, and population density. As such, unitary countries such as Ireland, Estonia, and the UK have increasingly adopted robust regional planning and development to bridge gaps between local and national policies, underscoring its importance in achieving coherent spatial development across all levels of government.

Spatial development for sustainable and equitable outcomes

Sprawl and low-density development on the outskirts of major cities is a common phenomenon across many OECD countries, including Israel, that undermines environmental sustainability by increasing land consumption, promoting car dependency, and escalating energy use for transport, heating and cooling, all of which contribute to higher carbon emissions, biodiversity loss, and land degradation. These development patterns also impose significant infrastructure costs and exacerbate traffic congestion. Spatial planning and development frameworks that prioritise sustainable spatial development through measures such as limiting land supply on urban fringes, relaxing density regulations near urban centres and enhancing transit-oriented development can address these challenges and reduce long-term costs. Portugal's Sustainable Cities 2020 initiative and Copenhagen’s “Finger plan”, for example, demonstrate the benefits of long-term commitment to high-density, transit-oriented development and preservation of green spaces.

Urban renewal can support densification, including by making room for subsidised social housing, which is typically denser per square metre compared to non-subsidised housing. Land-based finance can support social housing. France’s Agence nationale pour la renovation urbaine is a public agency that funds and supports large-scale urban renewal projects in France’s socially most vulnerable neighbourhoods through targeted interventions, aiming to improve housing, promote social diversity, and enhance connectivity. Since 2020, the German city of Frankfurt requires the provision of 30% affordable rental units in housing developments, as well as 10% affordable owner-occupied units, 15% co-operative units and 15% free-market rental units.

Spatial development patterns can exacerbate social and economic inequalities by reinforcing uneven outcomes for different groups and areas, including specific ethnic, religious, and socio-economic communities, as well as between neighbouring regions or neighbourhoods. Spatial planning and development frameworks can address these disparities through targeted interventions such as expanding infrastructure, fostering new industries, and creating amenities that support disadvantaged groups and localities. For instance, extending public transport into low socio-economic areas, as seen in Toronto, can significantly improve access to employment, education, and cultural activities, particularly for low-income households without car access. Similarly, metropolitan governance mechanisms can reduce fragmentation, lower service costs, and address segregation issues. Property taxes and the transfer system can also be structured to promote the equitable distribution of spatial resources across subnational jurisdictions and mitigate incentives to exclude the poor. These strategies demonstrate the importance of integrating equity-focused priorities into spatial planning and development to mitigate entrenched inequalities and support inclusive growth.

Spatial development trends in Israel

Israel, a small and densely populated country with limited land reserves and natural resources, faces significant spatial pressures due to rapid population growth and rising demand for land, housing, and public services. The country’s pronounced socioeconomic disparities, among the highest in the OECD, stem from the concentration of economic activity in Tel Aviv and the spatial clustering of ethnic and religious groups. These challenges place considerable strain on spatial planning and development policies to efficiently allocate land, distribute public amenities and economic opportunities more equitably, and address climate change. Israel is more densely populated than most European OECD countries, reinforcing the case for efficient land use, avoiding sprawl. At the same time, Tel Aviv is less densely populated than some European metropolitan areas, suggesting potential to raise density in well-connected areas within urban centres. The relatively large household size in Israel (3.7 people per household on average) can facilitate densification, especially if social housing is provided in well-connected locations.

Urban expansion and demographic divergence influenced by ethnicity

Cities cover 4.4% of land in Israel, significantly above the OECD average, while only 8.7% of the population lives in rural areas, the lowest among OECD countries. Since 2000, Israel's population has grown by 52%, far exceeding the OECD average. Cities in Israel’s core, like Netanya and Tel Aviv-Yafo have seen rapid spatial expansion, whereas regions further from Israel’s centre, such as Haifa and Nazareth, have grown at a much slower pace. This pattern indicates a continued concentration of population around Tel Aviv, spreading out from urban cores, further expanding already large cities.

Demographic trends in Israel are heavily influenced by ethnicity, religion, and urbanisation, leading to significant variations in population dynamics. From 2016 to 2020, municipalities with a predominantly Israeli-Arab population grew primarily through natural increase, while Jewish municipalities had a more mixed growth profile with notable contributions from migration. Haredi-Jewish communities, which have extremely high natural growth rates, play a significant role in the demographic trends of Jewish municipalities outside major cities. Consequently, demographic compositions across regions vary, with Israeli-Arab municipalities typically having younger populations while Jewish cities, with the exception of Tel Aviv-Yafo and Jerusalem, tending towards an older demographic profile. These divergent demographics necessitate tailored spatial planning and development strategies that address the differing needs for public services, amenities, and employment opportunities across Israel’s diverse regions.

Low-density development and spatial mismatches

Israel's land use patterns reflect high population density, with 5% of its land classified as built-up, significantly above the OECD average. However, despite rapid population growth, the density of new developments, particularly in regions like the Northern District, is relatively low compared to similar OECD regions, especially in Europe. Overall, population growth and new development in Israel has concentrated primarily in the urban periphery, particularly 10 to 30 kilometres from urban centres. These areas, mainly in commuting zones, have seen a significant increase in built-up area per capita in recent years. In particular, high-income areas in the urban periphery tend to be dominated by low-density, detached housing, as opposed to lower-income areas where mid- to high-density residential areas make up the vast majority of residential land use. These development patterns result in in inefficient land use while reinforcing spatial socioeconomic inequalities.

The issuance of building permits in Israel is often misaligned with development demand. New residential building permits are disproportionately issued in areas far from urban centres, where housing demand is lower, while permits remain restricted in high-demand areas close to city centres due to land-use regulations. These patterns indicate that new developments in commuting zones are not attracting residents. This misallocation exacerbates sprawl, hinders urban densification, and fails to address housing needs where they are most acute. The overall decline of built-up density, especially in intermediate areas on the urban outskirts, underscores the need for spatial planning frameworks to prioritise densification and more efficient land use near urban cores.

Challenges in meeting environmental targets and managing resource use

Israel has significantly raised its climate ambitions, including a goal of reducing greenhouse gas (GHG) emissions by 85% by 2050 and achieving carbon neutrality. Despite these targets, Israel is currently not on track, with emissions per capita remaining steady since 1990 and overall GHG emissions growing by 95% between 1990 and 2018, which far outpaces most OECD countries even after accounting for population growth. Low-density development patterns contribute, while also resulting in sprawling infrastructure that is energy-intensive and costly to maintain.

The environmental impact of Israel’s current land use contributes to biodiversity loss and degradation of natural landscapes. Israel has the highest number of threatened mammal species among OECD countries. Urban sprawl contributes to habitat fragmentation and reduced ecosystem services. The rise in heat stress days, particularly in regions like Haifa and Tel Aviv, further underscores the urgent need for sustainable spatial development as climate change pressures intensify. Moreover, disparities in environmental footprints between high- and low-income areas, such as differences in private vehicle ownership, wastewater generation, residential density, and availability of green spaces, highlight how current development patterns not only strain environmental resources but also exacerbate social and economic inequalities while increasing the poor’s vulnerability to climate change impacts. Addressing these challenges will require targeted policies to enhance urban vegetation, reduce reliance on private vehicles, and ensure more equitable distribution of environmental benefits and burdens across Israel’s diverse regions.

Income inequality and access gaps

Israel faces significant economic disparities across its local authorities, with income levels in the richest areas more than three times higher than in the poorest. These disparities are widening, with growth in disposable income largely confined to wealthy local authorities, leading to a sharp rise in inequality between the top and bottom regions. Spatial segregation of ethnic and religious groups, particularly between Arab-Israeli and Jewish communities, further compounds these disparities, with notable income differences observed between urban and rural areas. In cities, median monthly incomes are significantly higher in Jewish local authorities compared to Arab-Israeli ones, while inequalities are less pronounced in rural areas due to generally lower income levels in Jewish rural areas.

Socioeconomic segregation is evident in Israel’s spatial landscape, with distinct clustering of similar socioeconomic profiles. Poorer local authorities often lack the resources needed to provide adequate public services, resulting in disparities in access to essential facilities such as hospitals and schools. Accessibility to hospitals in high-income city areas is 2.5 times higher than in low-income areas, and this gap widens further in intermediate regions. These disparities underscore the urgent need for targeted policies that enhance access to employment, education, and public services in low-income areas to prevent them from falling further behind, focusing particularly on improving economic opportunities for disadvantaged groups.

The spatial planning and development framework in Israel

Israel’s spatial planning and development framework is characterised by a centralised structure and public development practices stemming from central government ownership of the vast majority of land. Key actors include the Israel Land Authority (ILA), which manages 93% of the nation’s land, the Israel Planning Administration (IPA), which oversees statutory planning, the Ministry of Housing and Construction, which focuses on housing development, and the Ministry of Finance, which influences spatial development through economic policy and funding. The ILA, under the guidance of the Israel Land Council (ILC), plays a pivotal role in land allocation, planning, and development. This structure, while facilitating rapid approval of development projects in the face of urgent needs such as population growth, lacks a cohesive national spatial vision, resulting in fragmented and often conflicting spatial development efforts among multiple agencies, which has also slowed down implementing development projects in housing.

In 2023, the IPA introduced the National Spatial Strategic Plan (NSSP), addressing planning and development priorities across the country. It emphasizes the need to develop living environments that enable accessibility to services and opportunities and socially equitable economic development. More generally, the NSSP addresses urban development, climate change, open spaces and technological changes with a long-term strategic view, providing policy recommendations. It also defines functional regions according to daily travel patterns of residents around urban centres, providing a welcome base to coordinate spatial development within functional urban areas. However, the NSSP has no statutory force and is not integrated into the statutory outline plans.

Spatial development prioritises profit over strategic societal goals

Over the years, the ILA’s land marketing practices have gradually shifted focus from preserving agricultural and undeveloped land to promoting profitability through land development. Profits arise from value uplifts as natural land is converted to buildable land. This shift, driven by reforms that began in the 1990s, prioritises monetary returns over strategic societal goals. The ILA, as a major developer, tends to auction land to the highest bidder. As a result, lucrative development often overrides strategic considerations, such as the need for green spaces or affordable housing, sidelining important societal objectives in favour of short-term financial gain.

The emphasis on profitable land development is evident in the increasing number of residential units marketed by the ILA, which surged following reforms in 2009. While these efforts boost state revenue, they often conflict with strategic national objectives. Land developed by ILA has reinforced sprawl. For example, initiatives that would limit development in ecologically sensitive areas have been opposed, due to the worry that such restrictions would hinder housing construction. This approach illustrates how near-term financial incentives can drive development decisions that may undermine broader societal goals and increase long-term costs, highlighting the need for a more balanced approach that integrates environmental, social, and strategic considerations into spatial development practices.

Fragmentation in spatial planning governance and frequent planning amendments undermine spatial development coherence

Israel’s spatial planning and development system is characterised by significant fragmentation and a reactive approach to development, resulting in inconsistencies that undermine long-term strategic objectives. Multiple actors, including various ministries, the Israel Planning Administration (IPA), the Israel Land Authority (ILA), and special committees, often pursue independent spatial development agendas with little coordination. This lack of coherence leads to overlapping and, at times, conflicting development plans that are driven more by short-term economic considerations than by a comprehensive spatial vision.

Special committees, such as the National Committee for Preferred Housing Plans, are empowered to bypass traditional statutory planning processes. They amend statutory plans without requiring approval from lower-ranked planning bodies, resulting in poorly coordinated developments that do not align with local land-use needs. The reduced public scrutiny and accountability within these special committees further exacerbate governance challenges. While such mechanisms facilitate the rapid approval of spatial development projects such as for infrastructure and housing, they do so at the expense of integrated planning and accountability, often sidelining environmental and social considerations. The outcome is uncoordinated development, which raises long-term infrastructure and environmental costs while failing to align with broader societal objectives.

Moreover, the statutory planning framework is weakened by frequent amendments to plans, driven by the need to accommodate specific projects. These amendments are often initiated by governmental institutions and private developers, resulting in piecemeal changes that diverge from the original statutory goals. The frequency of such modifications reflects a reactive planning culture that struggles to maintain stable and enforceable policies. This undermines the spatial planning and development framework’s effectiveness in guiding sustainable and equitable development, as immediate development pressures take precedence over a strategic, long-term spatial vision.

The limited autonomy of local governments constrains locally tailored solutions

Israel’s governance structure is highly centralised. The national level holds the majority of power, while the local level, consisting of 256 localities, is mainly tasked with the provision of services. The responsibilities of local governments are largely shaped by national policies and historical legislative frameworks dating back to the British Mandate period. This limited autonomy is evident in spatial planning, where local governments are responsible for preparing and implementing local outline plans, but often face restrictions and interventions from district and national planning bodies.

Local governments’ responsibilities are narrowly defined and heavily regulated by national laws, leaving them with little room to influence critical areas such as housing, economic development, or strategic spatial development. Local authorities are constrained by a lack of operational independence, as their finances and jurisdiction are tightly controlled, and their capacity to initiate independent development projects is restricted. In recent years, the role of local authorities in spatial development has been increasingly challenged by national-level committees that can bypass local development plans, undermining local input and decision-making in key development areas. The marginalisation of local governments hampers their ability to address the specific needs of their communities, leading to a disconnect between national development strategies and local priorities.

The constrained role of local governments poses significant challenges for effective spatial planning and development. The inability of municipalities to actively participate in or shape development initiatives undermines their capacity to foster locally tailored solutions. The over-centralisation of planning authority also leads to a one-size-fits-all approach that often neglects the diverse needs of different localities, particularly those with unique socio-economic or geographical characteristics. This misalignment can result in inefficient land use, inequitable access to services, and missed opportunities for local economic development, ultimately stifling the potential for more resilient spatial planning and development.

A centralised finance model reinforces inequalities and inefficient spatial development

Israel’s subnational finance framework is highly centralised, with local authorities operating under strict oversight from the national government. Local authorities manage two types of budgets: a regular budget for essential services, funded through property taxes and government transfers, and an irregular budget for spatial development, funded through development levies and specific government allocations. The property tax (Arnona) is the primary revenue source for local authorities, but rates and classifications are tightly regulated by national reforms, limiting the financial autonomy of local governments. Additionally, local authorities must navigate complex and centralised procedures for enacting bylaws related to local development, further constraining their ability to finance and initiate spatial planning projects independently.

The centralised finance model severely limits the fiscal autonomy and capacity of local governments, creating significant challenges for balanced and equitable spatial development. As property taxes on non-residential properties, such as commercial and industrial lands, are significantly higher than for residential properties, local authorities are incentivised to prioritise commercial and industrial developments over residential housing, leading to suboptimal land use and spatial development. Indeed, the resulting development patterns force residents, especially in disadvantaged localities, to travel long distances for employment and services, increasing reliance on private vehicles and further entrenching socio-economic disadvantages. High residential densities combined with low property tax collections in disadvantaged local authorities, particularly those with predominantly Israeli-Arab populations, also hinder these areas' ability to provide adequate public services, further widening socio-economic gaps. The current finance model thus undermines efforts to achieve more equitable, efficient, and sustainable spatial development across Israel. While government transfers aim to balance these disparities, their impact is limited compared to other OECD countries. Local governments have incentives to attract relatively wealthy residents with low-density development. This also contributes to leaving Israel with some of the highest disparities in government revenues after redistribution.

Regional clusters promote coordination yet with uneven impact and strategic challenges

The Israeli government has promoted regional coordination through the establishment of regional clusters (Eshkolot), which are voluntary associations of neighbouring local authorities aimed at fostering cooperation and overcoming competition between municipalities. Each Eshkol must include at least six localities, a diverse mix of municipal statuses, socio-economic levels, and populations, and typically serves a combined population of over 50,000 residents. The clusters are governed by statutory commissions composed of local elected officials and senior staff, with each local authority participating in the Eshkol's activities based on voluntary agreements. The Eshkolot receive dedicated funding from the Ministry of the Interior for establishment, ongoing operations, and development projects, supplemented by contributions from member authorities and additional government allocations. As of 2023, there are 12 Eshkolot in Israel, encompassing 170 local authorities serving 3.4 million residents, primarily in the northern and southern peripheries, where cooperation between diverse communities is most needed.

The Eshkol model offers several strengths, including improved service delivery, cost savings through shared resources, and enhanced regional development collaboration across local authorities. By pooling resources, the Eshkolot have been able to offer a wider range of social and environmental services, manage public tenders more efficiently, and secure significant development funds from national ministries. The clusters also foster a cooperative environment that can bridge gaps between heterogeneous jurisdictions, supporting regional development and helping to reduce socio-economic disparities. However, the model also faces notable weaknesses, including the lack of a standardised administrative framework, which leads to inconsistencies in the scope and effectiveness of the Eshkolot's activities. Additionally, there are ongoing challenges in building trust and collaboration between participating municipalities, with some wealthier local authorities perceiving the Eshkol as limiting their independence. Furthermore, the lack of clear evaluation processes and formalised roles within the broader governance structure raises questions about the accountability of the Eshkolot. This also raises questions regarding their influence on long-term impact and strategic direction in spatial planning and regional development Core metropolitan cities are not usually included in Eshkols, which can contribute to fragmentation and prevent municipalities from cooperating within economically integrated Functional urban areas (FUAs). As experience across OECD countries has shown, organising effective municipal cooperation can improve resource allocation in housing, spatial planning and transport policies, producing better regional development outcomes.

Key policy recommendations

Establish long-term national spatial development priorities and separate development and regulatory powers

Israel's spatial planning and development system must address two critical weaknesses: the fragmentation of authority across multiple institutions and the conflation of development and regulatory roles. An institution such as the Israel Planning Administration should be empowered to establish legally binding, long-term planning objectives and measurable development principles that become statutory through parliamentary legislation. The IPA is well-placed to do so, as it already developed the NSSP, that establishes such spatial planning and development objectives. These principles should mandate specific requirements for public transport accessibility, mixed-use development, and environmental protection, whilst requiring urban regeneration before new development occurs. These reforms require redefining the role of individual central government ministries, so they contribute to overarching goals and principles, rather than conduct their own spatial development initiatives, thereby resulting in an improved spatial allocation of resources. The integration of whole-of-government goals and their legislation in parliament would also give it democratic legitimacy.

Simultaneously, the development authorisation system should be restructured to ensure clear separation between plan-makers and regulators, with the National Planning and Building Board and District Committees staffed by independent professional experts rather than government representatives. This reformed system should cascade from national to local levels with robust coordination mechanisms, requiring all development plans to align with strategic objectives rather than institutional interests. The reforms would help prevent the current pattern where various bodies bypass local authorities and comprehensive planning and development considerations, leading to uncoordinated, sprawling development that fails to address Israel's pressing spatial challenges. This could also help reveal local public good preferences, strengthening local democracy.

Empower local governments through decentralisation

A degree of decentralisation of planning and development powers to local governments would enable them to play a larger role in the development process, allowing local interests to be better represented while easing the workload of national supervisory bodies. Local governments should be granted more autonomy to legislate bylaws on land use, finance infrastructure, and design local development strategies, fostering creativity and enhancing management capacity, particularly in smaller or weaker municipalities. This delegation of powers should be accompanied by adequate legal and administrative support from the central government to ensure local authorities can fulfil their expanded roles effectively. Reforming the local tax system is also necessary to address the current bias towards commercial and industrial as well as high-income residential development. Tools such as regional tax reductions and targeted development incentives should be strategically managed to support national spatial policies, ensuring that all financial decisions reinforce a balanced and integrated spatial development approach. The redistribution of tax revenues should ideally be conducted at a regional scale and through transparent formulas, to support localities that require more financial support. These efforts should be coupled with legislative and administrative reforms that give local governments more autonomy to approve spatial development projects that can enlarge tax revenues.

Enhance inter-municipal cooperation

Stronger support for regional entities such as the Eshkolot can foster regional cooperation, reducing socio-economic disparities while preserving the unique characteristics of localities. The government should provide clear legislative and administrative frameworks for these clusters, detailing their functions and financial contributions from member municipalities. Ministries should also reorganize their interactions with these clusters, ensuring alignment with national development goals while preserving the unique characteristics and autonomy of individual municipalities. The government could encourage future municipal cooperation within FUAs, integrating metropolitan centres. This could be based on the regions defined by the NSSP. For example, the government could match government funding to regional strategic priorities defined with the local authorities in these regions.