The fate of the Third Apartment Tax has been deemed important enough to convene the Knesset Finance Committee for a special session during the Knesset’s summer recess after the law was struck down Sunday by the High Court. Committee chairman MK Rabbi Moshe Gafni (United Torah Judaism) has consulted with Finance Minister Moshe Kahlon and coalition chairman MK David Bitan (Likud) on convening the committee, despite the fact that many coalition members are not interested in passing the law again. And, even if the committee does convene, it will probably not be until early September; the Knesset officially goes on vacation between August 16 and September 3, with the building shut down and all workers — and, of course, MKs — on vacation.
It was Kahlon who provided the impetus for the committee discussion; the Third Apartment Tax was a key cornerstone of his housing policy, designed to prevent rich investors from cornering the market on apartments and reducing the supply for young, less wealthy homebuyers. However, critics have said that Kahlon is making too much of the matter; the Central Bureau of Statistics has determined that of the 1.9 million Israeli households that owned real estate in 2016, 43,411 owned more than two properties.
Even though he is convening the committee, MK Rabbi Gafni is not a fan of the tax, “and that is no secret,” he told Yisrael Hayom. “Unlike the finance minister, I do not believe this tax will reduce housing prices. But if it is the coalition’s decision to pass this law, I will do what I need to in order to accomplish that, in the name of coalition discipline.”
Under the tax, which went into effect January 1, landlords were supposed to pay 1-percent 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 of the 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.
The court did not rule against the content of the law, but against the way it was legislated — specifically, the way the Finance Committee pushed the legislation through for a late-night vote. According to petitioners who brought the lawsuit that resulted in the court’s ruling that the law as it stood violated several Israeli basic laws — and that it needed to be legislated again — the Finance Committee did not provide them with sufficient opportunity to appeal to MKs to vote against it. MK Rabbi Gafni said that the committee would be much more careful this time. “The court was right — this is not the way to pass a law. This time, everything will be done normally, as with all other laws, and everyone will have a chance to express their opinion. Whatever problems we had in passing the law the first time will not be repeated” — with no last-minute late-night votes, he said.
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.”