Mekorot Sues Israeli Government Over Soaring Property Tax on Water Facilities

Mekorot, Israel's national water company, has filed a petition with the Supreme Court against the state, the Finance and Interior Ministries, the Water Authority, and the Local Government Center. The company accuses these bodies of failing for years to regulate property tax rates imposed on water and sewage facilities, despite prior government decisions to do so. Mekorot claims this regulatory void has allowed local authorities to sharply increase property tax charges on water infrastructure within their jurisdictions, costs that are ultimately passed on to all water consumers in Israel.

The petition requests the court to order the government to finalize regulations that would set property tax tariffs for national infrastructure facilities, including water and sewage plants. Mekorot also seeks an interim injunction to prevent approval of any exceptional property tax hikes on these facilities until the regulatory framework is completed. In 2023, the government decided to establish minimum and maximum property tax rates for national infrastructure facilities and ratified this move, but the necessary regulations have yet to be implemented.

Mekorot highlights that because Israel's water sector operates as a closed system, any increase in property tax paid by the company is transferred to water tariffs paid by households, municipalities, and industries. The petition cites a specific case where the Hof Ashkelon Regional Council raised property tax on one of Mekorot's facilities by 1,662 percent, increasing annual payments by approximately 19.5 million shekels. The company argues that the ongoing delay in implementing government decisions harms regulatory certainty and perpetuates inconsistent policies among local authorities regarding infrastructure facilities.

Earlier in March, Mekorot also petitioned the Supreme Court against the Water Authority to annul decisions related to changes in water regulations, warning that these changes would severely impact its investments in national water infrastructure development.