A new study by Hashomer HaChadash, conducted in collaboration with the Rifman Institute for Negev Development, argues that organized crime, extortion, and weak governance are costing the Israeli economy approximately NIS 23 billion annually, adding an estimated NIS 8,000 per year to the expenses of the average household.
The report, released on Sunday, is based on data from the Finance Ministry, Israel Tax Authority, State Comptroller reports, and nationwide surveys. It contends that beyond inflation, interest rates, and global supply chain pressures, the expansion of organized crime has become a significant contributor to Israel's rising cost of living.
According to the findings, the economic damage caused by protection rackets, agricultural crime, organized theft, and the shadow economy amounts to roughly NIS 23 billion each year. The report says these costs are ultimately passed on to consumers through higher housing prices, food costs, insurance premiums, and taxes.
In the construction sector, extortion payments reportedly account for up to 5% of project budgets, increasing the cost of new homes by tens of thousands of shekels. The study also states that continued agricultural crime has reduced local produce supply, contributing to higher fruit and vegetable prices.
Vehicle insurance premiums have risen by as much as 56% over the past two years, which the report attributes to increased vehicle theft, break-ins, and vandalism.
The study also highlights the extent of extortion targeting farmers, finding that approximately 93% of farmers in the eastern Galilee and 90% in the Negev Highlands report experiencing threats or extortion demands.
Yoel Zilberman, founder and CEO of Hashomer HaChadash, said Israelis are effectively "paying twice"—once through taxes and again through the costs imposed by organized crime. He argued that extortion in agriculture and construction, along with rising insurance costs, has turned criminal activity into "a major driver of the cost of living," adding that restoring governance is both a security and economic priority.
On Rifman, co-founder and vice president of education at Hashomer HaChadash, said the report's estimated "silent tax" of NIS 8,000 per household leaves many families with less money for extracurricular activities, tutoring, sports, and other educational opportunities. He warned that the financial burden ultimately affects children's future opportunities.
Hagai Resnik, head of the Rifman Institute for Negev Development, said the findings point to a broader structural problem in which criminal activity undermines investment, construction, and economic growth in parts of the country. He said addressing the issue requires a coordinated national response combining stronger law enforcement, civil regulation, and economic measures.
Following the publication of the report, Hashomer HaChadash called on the government to adopt a comprehensive national plan that would strengthen law enforcement, expand economic enforcement against criminal organizations, regulate vulnerable sectors, and increase protections for farmers and construction sites in an effort to reduce the broader economic impact of organized crime.
Written in collaboration with Hashomer HaChadash