MK Rabbi Gafni: Kahlon’s Third-Apartment Tax Needs Reworking

In his first comments on the new plan to tax owners of three or more apartments with a special surcharge, Knesset Finance Committee head MK Rabbi Moshe Gafni said that he intended to call a special session of the committee to discuss the proposal. The proposal, a part of the Arrangements Law, is set to be approved by the government in the coming weeks.

However, before that, it must past the scrutiny of the committee. Speaking to Yediot Acharonot, Rabbi Gafni said that the idea needed some reworking. “First of all, it harms property rights. And is likely to cause a sharp increase in rental costs. This is something we must prevent.” Most of the committee members, he said, oppose the law as it stands because of this reason. “The law is supposed to lower housing costs, but it is very likely to achieve opposite results. In its current form it is not a good law.”

Beginning January 1, Israelis who own more than two apartments will pay a special tax, if Kachlon has his way. Under his proposal, landlords will 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 maximum 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 is expected that most of the Israelis who will have to pay the tax will pay the full amount.

The rule is expected to affect 50,000 people, who own a total of 180,000 homes. The value of the home will be determined by a government-certified assessor, based on home value data supplied by the Central Bureau of Statistics for each geographical area.

Committee member MK Stav Shafir (Zionist Camp), who generally is in favor of taxes to pay for social programs, is opposed to this one. “If they want to impose a tax, let it be implemented in the context of a law for fairly priced rentals. I suggest placing all rents under supervision, so that they cannot be raised. In recent days I have heard from many tenants who have been informed by their landlords that their rents will be going up because of this law. If we are going to implement it we have to have rent control, as they have in many countries.”

Speaking last week, Amir Levy, director of budgets in the Finance Ministry, said he did not believe the new law would affect rents. Levy said that the ministry had done an in-depth analysis of the matter before proposing the tax and had determined that rents would not be raised en masse as a result of the tax’s imposition. “The maximum number of rental apartments to be affected by this law is 80,000, out of a total of 650,000 on the market,” he told Globes. “In addition, those who will have to pay the tax can well afford it. The average age of those affected is 56, with a monthly income of NIS 46,000.” Given the competition for renters and the large number of options available, the ministry does not see the tax as an opportunity for a general increase in rents, he added.