A broad wave of requests for exceptional municipal property tax increases has been submitted to Israel’s Interior Ministry in recent days, with some local authorities seeking increases far beyond the nationwide automatic adjustment scheduled for 2027.
Under the so-called automatic adjustment mechanism, municipal property tax, known in Israel as arnona, will rise by 3.05% across the country next year. Many municipalities, however, have asked the ministry to approve additional increases for residential and commercial properties.
Nazareth
(Photo: Elad Gershgorn)
In previous years, most exceptional requests were approved, although the government sometimes reduced the requested increase.
Data obtained by Yedioth Ahronoth’s Mamon financial supplement and ynet show that a small number of municipalities have taken the opposite approach and requested reductions in certain property tax rates. The Federation of Israeli Chambers of Commerce and the Manufacturers Association of Israel strongly opposed the planned increases for businesses and households and said they would fight them.
If approved, the changes will take effect on January 1, adding hundreds of shekels to annual household bills and potentially tens of thousands of shekels to the costs borne by businesses.
Among the municipalities submitting exceptional requests was Azor, which sought an additional 10% increase for commercial and service businesses. Together with the automatic adjustment, the total increase would reach 13.05%.
Ramat Gan requested an exceptional increase of 6.95%, bringing the total increase for homes and businesses to 10%. Ariel sought an additional 5.15%, for a total increase of 8.2% for residential and commercial properties. Ashdod requested an additional 4.45%, bringing its total proposed increase to 7.5%.
Eilat requested a 4% increase for vacation residences, as well as increases of between 1.6% and 8.15% for hotels. The steepest request came from Nazareth, which sought an exceptional 30% increase for both homes and businesses. Including the automatic adjustment, municipal property tax there could rise by 33.05%.
Gan Yavne requested a total increase of 10%, while Kiryat Malachi sought an overall 8.05% increase for businesses. Rehovot requested an 8% increase for residential properties. Sakhnin and Tel Mond each sought total increases of 5%, while Ness Ziona requested an overall increase of 4.55%.
Only a handful of municipalities submitted requests to reduce property tax rates. Or Yehuda sought reductions of between 2% and 12% for businesses, depending on the type of property. Ashkelon requested a 3.05% reduction for commercial properties, effectively canceling the automatic increase.
Shahar Turgeman, president of the Federation of Israeli Chambers of Commerce, said the wave of exceptional requests demonstrated that the property tax system had “long since spun out of control.”
“Instead of requiring local authorities to become more efficient, reduce spending and fully utilize their sources of income, the state repeatedly allows them to reach into the pockets of businesses and residents,” he said.
Turgeman said property tax rates imposed on Israeli businesses were already approximately 40% higher than those commonly charged in European countries.
Shahar Turgeman Photo: Assaf Lev“Instead of addressing the root of the problem, they continue to place more and more of the burden on the business sector,” he said. “This policy harms growth, increases the cost of living and deepens the distortion that makes it more profitable for local authorities to promote commercial and employment areas than residential neighborhoods.”
“It is time to establish a simple rule: An authority that has not proved it has become more efficient should not receive approval to raise property taxes,” he added.
Turgeman praised Or Yehuda and Ashkelon for requesting reductions for businesses. “They prove that it is possible to manage things differently,” he said. “The public and business owners expect local authorities to pursue efficiency and view property tax increases as a last resort, not the default option.”