Israeli Government Fails to Set Guidelines, Risking Sharp Property Tax Hikes in 2027

The Israeli government has failed to establish the required guidelines for approving exceptional property tax increases for the year 2027, potentially leading to significant hikes in municipal property taxes across various localities. According to regulations, these guidelines should have been set and communicated to local authorities by July 1, 2024, but this deadline was missed. As a result, local councils currently have the freedom to raise property tax rates at their discretion.

By law, the Minister of the Interior is responsible for setting these directives, but since there is no current Interior Minister, Prime Minister Benjamin Netanyahu holds these powers following a Knesset decision. This unusual situation has created a loophole that local authorities might exploit, raising concerns about administrative irregularities and unfair tax increases.

Abraham Novogratzky, president of the Manufacturers Association of Israel, sent an urgent letter to Prime Minister Netanyahu warning that the absence of timely guidelines violates principles of proper governance and transparency. He emphasized that the guidelines should be made public before local authorities submit their requests for exceptional tax hikes, to prevent the policy from being retrofitted to suit local demands rather than restraining them.

Novogratzky pointed out that a similar delay occurred last year for the 2026 tax year, which led to an expansion of allowable exceptional increases contrary to the Interior Ministry’s stated policy. He urged that the 2027 guidelines urgently prohibit any exceptional property tax increases to protect taxpayers’ rights and ensure administrative fairness.

Currently, local authorities have already drafted their 2027 property tax orders and are submitting requests for exceptional increases without clear regulatory boundaries, raising fears of widespread and unjustified tax hikes in the coming year.