Tel Aviv Turns Into the Biggest Winner From Israel’s Property Tax Fund
Tel Aviv-Yafo, once the loudest opponent of the government’s property tax fund, is now the biggest beneficiary, at least for now. According to Interior Ministry data, the city is set to receive nearly NIS 30 million in 2025, on top of about NIS 21 million for 2024.
The fund, approved in March 2023 as part of that year’s economic arrangements law, was designed to push housing construction and balance local tax revenues. Municipalities receive money based on new housing units added in their area, while they contribute part of the growth in non-residential property tax income. In the original debate, many wealthy municipalities led by Tel Aviv fought the plan, even staging a strike, and the Finance Ministry at the time projected Tel Aviv would lose more than NIS 190 million in 2024 to 2028.
This year, however, Tel Aviv’s housing additions and a narrow taxable base for the non-residential levy leave it with about NIS 30.6 million in grants and only about NIS 691,000 in payments to the fund, because of a rule excluding non-residential tax growth above 20% from the calculation. The city added 4,973 apartments in 2022 and 5,642 in 2021, enough to generate almost NIS 20 million on that basis alone. Jerusalem is also a major winner, expected to get about NIS 18 million in 2025 after paying in roughly NIS 11.5 million; it benefited from 7,490 new units in 2022 and a lower 20% contribution tier. Beit Shemesh will receive about NIS 11.3 million, while Bat Yam, Netanya, Rishon LeZion, Ramat Gan, Ashkelon and Beersheba are also set to gain.
On the losing side, Haifa is already expected to pay about NIS 10 million, the most among large cities, after a NIS 15.8 million contribution and only about NIS 5 million in housing grants. Petah Tikva will owe about NIS 4.6 million, Ashdod about NIS 2.2 million, Holon about NIS 1.2 million and Yehud-Monosson about NIS 431,000. The article notes that these amounts are still small relative to municipal budgets, though they are cumulative and expected to grow over time.
