After High Court Setback, Kahlon to Try for Third-Apartment Tax Again

Finance Minister Moshe Kahlon on Sunday asked the head of the Knesset Finance Committee, MK Rabbi Moshe Gafni, to examine the possibility of refiling the Third Apartment Tax law, after the High Court rejected it and ordered the Knesset to review it. Kahlon responded to the ruling by saying that he was “disappointed and deeply upset” by it. “I am sure that there are tens of thousands of young couples who feel as I do, and are disappointed in the decision.” Kahlon has asked MK Rabbi Gafni to convene the committee during the summer recess in order to determine what can be done to ensure that the legislation is approved by the Knesset again, and that it is not once again rejected by the court.

The court ruled in a lawsuit by opposition MKs that the law had been passed in an unacceptable manner. It will be recalled that the third apartment tax was pushed through in a marathon all-night session in December, with a vote to approve it conducted in the early morning hours. The court agreed with the contention of opposition MKs that the procedure was tainted and violated the Basic Law on governmental process.

“The legislation of this law was conducted in a bullying and intimidating manner, and this cannot be the source of a law in this country,” said MK Miki Rosenthal (Zionist Camp), one of the MKs who filed the lawsuit against it. “We cannot allow the standing of the Knesset and the democratic process to be compromised in the manner that occurred in the passage of this law. The legislation process of this law occurred in an illegal manner, with MKs not even able to study the law in advance.”

Under the tax, which went into effect January 1, landlords were supposed to pay a 1-percent tax per month on the assessed value of each home or apartment they own, beginning with the third property, up to a limit of NIS 1,500 per month, a total of NIS 18,000 a year. As the average value of homes in most cities is more than NIS 1.5 million, it was expected that most Israelis who will have to pay the tax will pay the full amount. The rule was to affect 50,000 people, who own a total of 180,000 homes.

Kahlon expressed hope that the legislation could be repaired and passed again. “This is not our first difficulty with this law; we have passed through many, with opposition from wealthy people, banks, financial institutions, investors, and other interests who prefer high apartment prices over giving an opportunity to young people. I promise that we will continue to battle the investors who want to defeat the tax.”

While the coalition supported the legislation and the lawsuit was brought by opposition MKs, support and opposition for the court ruling did not fall neatly along party lines. MK Betzalel Smotrich (Jewish Home), generally opposed to High Court interference in Knesset decision-making, actually approved of the decision. While the court has no business dictating the content of laws to the Knesset, “in this case it was not the law that was struck down, but the process which did not follow the rules of democracy in passing the legislation. Insisting that proper procedure be followed is the role the court should be playing in this situation.”

MK Shelly Yachimovich (Zionist Camp/Labor) said that she regretted the decision. “I actually support the tax, but I have no desire to help a finance minister who turns his back when there are mass firings at companies.”

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