Finance Minister Avigdor Liberman's proposal to raise residential property tax provoxes opposition from mayors

Finance Minister Avigdor Liberman's proposal to raise residential property tax rates under the forthcoming Arrangements Law is provoking strong opposition from many mayors. 161 mayors and regional councils turned to Finance Minister Avigdor Lieberman yesterday in an attempt to stop the move.
"We strongly oppose this proposal, demand that it be dropped from the agenda, and seek to hold a discussion with us once and for all in order to regulate the conditions necessary to ensure the construction of hundreds of thousands of housing units in the next decade," Lieberman said.
Recall that in the draft Arrangements Law leaked to the media yesterday, the Treasury proposed a 15% increase in residential property taxes over a decade, while a 10% reduction in property taxes for businesses at once starting in 2022. The proposed solution is intended to reduce soaring housing prices.
In the current situation where residential property tax rates are significantly lower than business property taxes, many local authorities are not interested in building new residential buildings on their territory. For example, the average rate of residential property tax in all local authorities is NIS 49 per square meter, while the average rate of offices, services and commerce is NIS 174, and banks and insurance companies at NIS 968.
Moreover, in residential areas there is a need to establish infrastructure, parks, educational frameworks, and even garbage removal is done more frequently. As a result of the existing distortion in property tax rates, mountain heads prefer to set up office, commercial and industrial areas rather than populate new residents due to being “deficit” in terms of property taxes.
The mayors justify their opposition to the move, among other things, by "significant lack of pocket money." This, while the draft Arrangements Law states that "this combined move of raising the property tax for residence and reducing the business property tax is expected to increase the aggregate budget of the local government."
"We were very disappointed with the Ministry of Finance's proposal on the issue in question, which is ostensibly intended to reduce or curb rising housing prices, by reducing the gap between property tax rates for businesses and residential property tax rates ...," the appeal said.
"We will not say too much at this stage, about the many flaws that fell in the proposal which will lead to a significant pocket shortfall for local authorities, but it was said that there is no trigger for it to create change in the housing market.
In this proposal, there is a failed attempt to atone for all the mistakes of Israeli governments for generations, the low level of investment in infrastructure and public institutions, under-budgeting of local authorities for state services, burdening public tasks on local authorities without funding sources, cuts over years in balance grants and transfers And other different and strange injustices. "