Israeli Municipalities Request Sharp Property Tax Hikes Amid Business Opposition

In recent days, numerous Israeli municipalities have submitted requests to the Ministry of Interior for exceptional increases in property tax rates beyond the automatic 3.05% hike scheduled for 2027. These requests, if approved, would take effect on January 1 and could raise annual property taxes by hundreds of shekels for households and tens of thousands for businesses. Notably, Nazareth has requested a steep 30% increase for both residential and commercial properties, totaling 33.05% including the automatic adjustment. Other municipalities seeking significant hikes include Ramat Gan (10%), Ariel (8.2%), Ashdod (7.5%), Eilat (up to 8.15% for hotels), Gan Yavne (10%), Kiryat Malakhi (8.05%), Rehovot (8%), Sakhnin (5%), Tel Mond (5%), and Nes Ziona (4.55%).

Conversely, a few municipalities such as Or Yehuda and Ashkelon have applied for reductions in property tax rates for businesses, ranging from 2% to 12% and a 3.05% cut respectively. The Federation of Israeli Chambers of Commerce and the Manufacturers Association have strongly opposed the proposed hikes, pledging to fight them. Shahar Turgeman, president of the Chambers of Commerce, criticized the policy, stating that property taxes on businesses in Israel are already about 40% higher than in European countries. He argued that instead of encouraging local authorities to improve efficiency and reduce expenses, the government repeatedly allows them to increase taxes on residents and businesses, which harms economic growth and raises living costs.

Turgeman called for a rule that municipalities must demonstrate efficiency improvements before being allowed to raise property taxes. He praised municipalities like Or Yehuda and Ashkelon for seeking tax reductions, highlighting them as examples of responsible management. The debate over these tax hikes reflects broader tensions between local government funding needs and economic pressures on businesses and households across Israel.