Court Overturns "Discriminatory" Property Tax Hike on Israeli Nursery

The Haifa District Court has partially accepted a petition filed by a nursery against the Kiryat Ata Municipality, following an extraordinary increase in its annual property tax bill. The nursery's tax liability jumped from approximately NIS 31,000 to nearly NIS 4.85 million.

Presiding Judge Tamar Naot Peri ruled that the new tax rate was unreasonable and discriminatory, effectively tailored specifically for the nursery. The nursery occupies a large plot of land that was formerly under the jurisdiction of the Zevulun Regional Council before municipal boundary changes transferred it to Kiryat Ata. In December 2022, the municipality issued a tax assessment for 2023 amounting to NIS 4,854,347.

The substantial increase was primarily due to the classification of approximately 98,000 square meters as "greenhouse/nursery" in a new "Zone 40" at a rate of NIS 49 per square meter. For comparison, the previous year's tax to the regional council was only NIS 31,420. Even within Kiryat Ata, the standard rate for greenhouses or nurseries in other zones was around NIS 20 per square meter.

The nursery argued that the exorbitant tax was unreasonable, discriminatory, and violated the municipality's commitment to maintain existing tax rates for agricultural land use. The municipality countered that the operation was commercial, akin to "industrial agriculture," and that classifying it as a "greenhouse/nursery" rather than "industry" was actually a concession. They also claimed there were no comparable properties in the area to justify a different rate.

Judge Naot Peri rejected the nursery's claim that the municipality had promised to keep its total tax bill unchanged. However, she found the specific rate of NIS 49 per square meter to be unreasonable, inadequately justified, and discriminatory, noting it appeared to be a personalized rate designed solely for the nursery. The court emphasized that this rate was applied only to the nursery in that specific area, representing a nearly 250% increase compared to the rate for the same classification elsewhere in the city without sufficient explanation. Consequently, the judge ordered the cancellation of the sub-classification and instructed the municipality to amend the tax order to remove the discrimination and unreasonableness. The nursery was awarded NIS 10,000 in legal costs.