Judge Rules Municipality Cannot Charge Property Tax on Sea Installation

Municipalities cannot charge local property tax ‏(arnona‏) for installations in the sea, the Haifa District Court ruled Sunday in an appeal by the Israel Electric Corp. against the city of Hadera, which had assessed the power company millions of shekels for an offshore facility.

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Judge Yael Willner explained that arnona is meant to be charged for use of land, not for the sea, and added that the municipality doesn’t supply any services at sea that would justify the charge.

At issue is the Orot Rabin power plant, which uses a two-kilometer-long conveyor belt to bring coal from cargo ships anchored at sea into the power plant on the coast.

The port was included within the city limits of Hadera three years ago. The municipality sent the IEC a notice of this change of jurisdiction, and included an arnona bill for nearly NIS 4 million for the months of July-October 2010. The demand was based on a calculation that included the relevant area of the sea. At that rate, arnona for sea use would have come to NIS 6 million a year.

The city argued in court that the charge was legal, because the sea area is integral to the IEC’s operational and business activities.

Willner, however, supported the IEC’s argument: That the off-shore facility doesn’t benefit from any municipal services and therefore can’t be assessed for property tax.

Arnona payments, she said, are made to the local authority for services that the authority provides, and to enable it to provide a range of services for the residents of the locality.

The judge thus voided the arnona assessment and ordered the Hadera municipality to pay the IEC NIS 20,000 in court costs.