In case the rises in house prices and rent were not enough, the arnona (property tax) on homes and businesses is expected to rise by 3.5-3.8% in January 2014, according to research by Katz Geva Itzkovich, ltd. (KGI), a law firm specializing in municipal taxation. By comparison, the increase in arnona on 1 January, 2013 (excepting special permits) was 2.3%.

According to Adv. Alex Katz, in accordance with the Economic Arrangements Law, effective thorough 2013, the arnona rates were updated by the local authorities according to an annual rate of 80% of the change in the Composite State of the Economy Index, which factors in 50% of the change in the Consumer Price Index, and 50% of the change in the Public Sector Salary Index.

However, in accordance with the bill to change national priorities, and based on a special agreement between the Union of Local Authorities in Israel (ULAI), the Union of Regional Councils, and a forum of the 15 major local authorities, the 80% rate was cancelled, such that beginning in 2014, the rate of increase in arnona will be the full change rate of the Composite State of the Economy Index.

As part of the same agreement it was decided that the 57 most financially sound local authorities will be allowed to charge an additional 0.3%, on top of the national increase, against a loan of NIS 450 million that was given to the Treasury.

Due to this, the rate of increase in arnona for 2014 is expected to be 3.48% nationwide and 3.78% in the 57 most financially sound municipalities, relative to 2013.

Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013