By Stephen Epstein
Ashkelon just announced that the city will be raising the municipal tax (Arnona), by 1.92 percent, which is the minimum amount set by the Ministry of Interior. While there are a variety of ways municipalities calculate municipal taxes, each city is able to charge residents different rates and increase beyond the amount mandated by the Ministry of Interior.
When comparing Ashkelon’s Arnona rate to other municipalities, we see a big difference in rates across Israel, with Ashkelon having one of the lowest Arnona rates in the entire country.
According to Kan Ashkelon, “…in recent years, residential property taxes have not increased in Ashkelon beyond the Ministry of the Interior’s update, despite the fact that this is one of the cheapest rates in Israel.” Since some cities have split rates between neighborhoods, it is difficult to specify the exact rate per city. The list below gives an indication of the rates in some major cities according to square meter.
- Ashkelon — 37 ₪
- Beer Sheva — 45 ₪
- Netanya — 45 ₪
- Rishon Lezion — 48 ₪
- Modiin — 48 – 51.36 ₪
- Yavne — 50 ₪
- Ashdod — 57 ₪
- Ramat Gan — 68 ₪
- Jerusalem 40 — 113 ₪
Arnona discounts are also available, which reduces the tax for Olim Chadashim (first year), pensioners, single parents, disabled residents, people with low income, parents of disabled children, bereaved families, yeshiva students, righteous gentiles and others. The list is quite long and some of the discounts are based on a certain discount on a maximum floor space (i.e., 100% of Arnona up to 100 square meters of an apartment).
David Zwebner of Ashkelon Properties, and a board member of the Ashkelon Foundation, commented, “Many people buy holiday apartments in Ashkelon because with such a low Arnona rate, the upkeep is very reasonable and owning an apartment can be less expensive than going to a hotel. When people buy holiday apartments here, they end up coming for weekends or holidays. They support the local economy, but do not consume a lot of the city services, such as schools, making their use of space more akin to commercial users.”
Ashkelon’s approach this year is to raise the residential tax by the minimum amount, but at the same time, lower the tax on offices, by a substantial amount.
Israeli cities are financed by residential and commercial/industrial taxes. Residents of a city use municipal services at a much higher percentage than commercial users. Owners of commercial and industrial spaces pay Arnona and naturally, do not need most of the services that residents use, such as schools, youth groups, pensioner groups, libraries, community centers, parks, roads, public events and festivals. Yet these same taxpaying companies provide employment for many residents. This is why cities actively try and recruit large companies to locate to their municipalities.
In order to make a city financially viable, like any business, the revenue has to cover the expenditures. The formula that is quite often used in Israel is 40/60. Where 40 percent of the revenue is from residential, 60 percent is from commercial/industrial. Today, in Ashkelon, there is a large number of residential units and a relatively small amount of commercial/industrial spaces. With the boom in residential real estate, Ashkelon needs to boost the amount of commercial/industrial space. So, the plan is to lower the Arnona on office space to encourage companies to open offices in the city. Other cities in the Merkaz that opened hi-tech parks have been able to draw on highly educated employees, especially if they are located on the train line. Cities such as Rehovot and Ness Ziona have become magnets for both large and small companies that employ thousands of people at relatively high salaries.
Michael Bar Dov, a longtime resident of Ashkelon and a former consultant to Israeli municipalities commented, “In my opinion, in order to establish and maintain a viable industry or economic enterprise in Ashkelon, it is necessary for Ashkelon to prepare and train people with the relevant professional know-how, in full corroboration and cooperation with the commercial and industrial sector.”
“This entails the synchronization of the subjects taught at schools and the provision of courses in the necessary skills at the Ashkelon Academic college.”
David Zwebner, who is also on the board of the Ashkelon Academic College added, “The college recently announced an English-language course and will be starting additional courses in the near future. The language of hi-tech around the world is English and the college is introducing courses that have an appeal to hi-tech workers.”
