Jerusalem Property Taxes, Both Private and Commercial, Are Highest in Israel

Bnei Brak has the highest property tax for industrial plants; Kiryat Shmona and Sakhnin have the lowest property taxes in the country.

Jerusalem’s local property taxes (arnona) for both businesses and residences are the highest in the country, according to an analysis by business intelligence company BDI-Coface, which was published on Tuesday. Bnei Brak has the highest property taxes for industrial plants, according to the report.

At the other end of the scale, the northern Israeli city of Kiryat Shmona has the cheapest property taxes for residences and industrial plants, while Sakhnin has the lowest property tax for commercial enterprises.

The BDI-Coface survey, which comes just two months ahead of local elections, was based on 2011 municipal property tax data because, the company said, 2012 data was not available for all local authorities.

Municipal property taxes constitute a major portion of most local authority budgets in Israel - an average of 38% of the municipal budget in the cities, 23.1% in the local councils and 32% in regional councils.

"With respect to arnona, residents are essentially captive customers, since moving from one community to another isn't an easy step," said BDI-Coface co-CEO Tehila Yanai. "The single but significant measure that residents have…is election day for local authorities." Nevertheless, she added, "it's important that residents understand that a serious drop in arnona collection would be to the detriment to the level of services they receive, and they should balance costs and benefits."

The five cities with the highest annual residential property taxes were: Jerusalem (NIS 66.5 per square meter), Givatayim and Haifa (NIS 58.1 per square meter), Ramat Gan (NIS 56 per squarer meter) and Holon (NIS 54.6 per square meter). By way of comparison, Tel Aviv was number 22 on this list, with a residential arnona rate of NIS 42.1 per square meter.

For commercial real estate, the top five cities in terms of annual local property tax rates were Jerusalem (NIS 298.5 per square meter), Kiryat Ono (NIS 274.3 per square meter), Ramat Gan (NIS 269.6 per square meter), Bat Yam (NIS 267.8 per square meter) and Hezliya (NIS 258.1 per square meter).

Daniel Bar-On