Churches Fume as City of Jerusalem Claims $186 Million in Overdue Tax

Earlier this week Jerusalem municipality stated that 887 properties belonging to various churches and UN institutions in the city owe municipal tax

A general view of the clock tower of the Church of Saint John the Baptist in Jerusalem.
Ronen Zvulun / Reuters

Church representatives have accused Jerusalem Mayor Nir Barkat of breaching international treaties after the municipality said it planned to collect 650 million shekels ($186 million) in back taxes owed by churches and international bodies with property in the city.

Earlier this week the city stated that 887 properties belonging to various churches and UN institutions in Jerusalem owe city tax (arnona). The properties are offices, schools and structures used for various purposes, but not houses of worship, which would be exempt from taxation, the city noted.

The Jerusalem municipality has already confiscated money from the bank accounts of several churches, saying that it seized 7.2 million shekels from the Anglican church, 2 million shekels from the Armenian church, 11 million shekels from the Catholic church and 570,000 shekels from the Greek Orthodox church.

The city’s collection campaign is based on a legal opinion by Prof. Gabriel Hallevy, whom the municipality described as an international law expert, according to which the churches are entitled to tax exemptions only on assets that are used for worship or religious teaching.

We will not agree to have the people of Jerusalem finance these vast sums any more, Barkat said. The state has to deal with the consequences of its own decisions, the mayor added. Either the state returns the money to usor the city will collect the money which it is owed by law, said Barkat, adding that if necessary the city would sue.

Jerusalem Mayor Nir Barkat
Olivier Fitoussi

Churches operating in Jerusalem reacted angrily at the city’s announcement. The Anglican Church confirmed that the bank had frozen its account at the city’s behest, but the other churches stated on Wednesday morning that they had not been advised of any change in the status of their bank accounts. They received no letters of warning nor any notice of taxes due, the churches said, and only learned of the policy change through the media.

The city’s announcement of its collection drive was first revealed in Israel Hayom on Friday.

Church leaders plan to meet next week to discuss the issue. They claim the city’s move violates international agreements to which Israel is party and also the historic status quo between the churches and Israeli governments.

Traditionally the churches have not paid municipal tax in Jerusalem, they said: This applied during the Ottoman period, the British Mandate period, the Jordanian period and the Israeli one as well.

Barkat’s real motive has to do with a leadership race in Likud and his struggle with the Finance Ministry over state funding for the city, claimed sources close to the churches.

A high-ranking source with the Catholic Church in Jerusalem said Barkat’s announcement was infuriating and cynical and blatantly violates the status quo that has existed since Israel’s establishment between the state and the Catholic Church.

The state never taxed the churches in Israel for their lands, in gratitude for the Christian community’s enormous contribution – “investing billions in building schools, preschools and homes for the community in Israel,” he said.

The announcement is misleading, the Catholic source said, since the city plays no role in maintaining the sites holy to Christianity: The churches fund that activity.

Wadie Abunassar, spokesman for the Latin Patriarch in Jerusalem, said the issue of taxing the church institutions is being discussed between Israel and the Vatican. He called on the city to revoke the steps already taken, and urged the Israeli government to “do what is necessary for guaranteeing respect of old understandings between civil authorities on one hand, and church and international bodies on the other hand.”

The Greek Orthodox Patriarchate condemned the city’s drive, saying it constitutes an attack on the religious status quo and contravenes precedents set by the Ottoman, Jordanian, British and Israeli rulers of the land. When he returns from a visit to the U.S., where he is participating in an annual convention of church leaders, the Greek Orthodox Patriarch will hold meetings on the issue, the patriarchate said.

The Greek church authorities are also peeved that the city of Jerusalem refuses to confirm that they have no debts, a certification they need in order to consummate a land sale deal in the Jerusalem neighborhood of Rehavia to private developers.

Sources in the Armenian and Anglican church also said they reject the city’s announcement.

The city of Jerusalem commented that it makes no sense for commercial land, not used in worship, to be exempt from arnona just because it is owned by a church, “certainly when the debts have mounted to the gigantic sum of 650 million shekels. For years the state wouldn’t let the city collect the debt,” the municipality stated. However, armed with a legal opinion, it began targeting the churches’ bank accounts, the city said.Throughout the years the city sent payment-due notices to the churches, the city added, noting that it has confirmation from Israel Post that the letters were received.

The Foreign Ministry did not provide comment.