Israel Considers Reinstating Property Tax on Vacant Land
Translated & summarized from Ice by baba
Israel's Tax Authority is considering reinstating a property tax on vacant land to address budget deficits and boost housing supply. The tax, abolished in 2000, would incentivize development and could generate billions for the state. However, the real estate sector fears it could lead to higher housing prices. Tax Authority Director Shai Aharonovich supports the measure as a way to avoid more damaging tax increases.
The story in 5 lines · by baba
- Israel's Tax Authority is considering reinstating a property tax on vacant land.
- The proposed tax aims to combat land hoarding and increase housing supply.
- Reinstating the tax could generate billions for the state and reduce the deficit.
- Real estate groups warn the tax might increase new apartment prices.
- Tax Authority Director Shai Aharonovich supports the measure, calling its prior cancellation a "wrong."
Amid significant budgetary challenges for 2027-2028 and a growing defense budget, Israeli tax authorities and the Ministry of Finance are exploring new revenue streams to avoid broad economic damage. A key proposal under consideration is the reinstatement of a property tax on vacant land, which was previously abolished in 2000. This tax, levied annually on undeveloped land, aims to incentivize developers to build or sell their properties, thereby increasing housing supply and combating land hoarding.
Officials believe this measure could generate billions of shekels annually for state coffers, helping to reduce the deficit without resorting to across-the-board tax hikes like VAT or income tax adjustments. However, real estate industry representatives warn that if the tax applies to land in planning and licensing stages, developers might pass the cost onto consumers, potentially increasing new apartment prices.
Shai Aharonovich, Director of the Tax Authority, discussed these plans at the annual Tax Consultants Association conference in Eilat. He criticized the 2000 repeal of the property tax as a "wrong," driven by special interests, and warned that failing to find alternative revenue sources could force drastic measures like VAT increases. Aharonovich emphasized the goal is to present a comprehensive, well-thought-out tax plan to the Minister of Finance and the government, designed to prevent damaging economic measures and avoid "hysterical steps" like severe tax hikes or budget cuts.
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